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Technical View: Nifty forms strong bull candle

From : Yatheendradas C.k. at 09:57 PM - Oct 12, 2017 ( )

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Oct 12, 2017 04:40 PM IST | Source: Moneycontrol.com

Technical View: Nifty forms strong bull candle; stay long with stop below 9955

The index rallied more than 100 points in trade and nullified the effect of Bearish Engulfing Pattern formed in the last session.

By Kshitij Anand    Moneycontrol News

The bulls managed to regain control of D-Street on Thursday after closing in negative territory in the previous session. The index made a strong bull candle on the daily candlestick charts and closed above 10K, which augers well for the bulls.

The Nifty index opened with a gap on the higher side and witnessed sustained buying interest from buyers till the end of the session. The index rallied more than 100 points in trade and nullified the effect of Bearish Engulfing Pattern formed in the last session.

Investors are advised to stay long with a strict stop loss below 9959 levels. If the strength continues, Nifty should be able to hit fresh record highs ahead of Diwali. The Supertrend indicator too gave a buy signal on the charts which is a bullish sign for investors.


The Nifty50 opened above 1oK at 10,011 and slipped marginally to an intraday low of 9977. But, then bulls took the index back above 10,100 to hit its intraday high of 10,104.45. It closed 111.60 points higher at 10,096.40.

“Bulls appear to have got a renewed lease of life as indices shrugged off Bearish Engulfing formation witnessed on Wednesday’s trading session with a solid bull candle. This move should certainly empower them to register new lifetime highs beyond 10179 levels as Thursday’s strong recovery has tilted the tide in favour of bulls and trade as of now looks to be on the long side,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“However, Bank Nifty is still trading below its 50-days EMS rising doubts about the sustainability of this up move. Hence, traders are advised to cautiously continue their long side bets with a stop below 9955 till further signs of weakness are visible,” he said.

India VIX fell down by 5.86% at 11.04. The decline in VIX with a sharp jump in Put Call Ratio has seen the strong comeback of bulls after one day’s breather.

On the options front, maximum Put OI shifted from 9800 to 10000 followed by 10100 strikes while maximum Call OI is intact at 10100 followed by 10000 strikes.

Fresh Put writing was seen at 10100, 10000 and 9900 strikes while Call unwinding was seen at 10000 to 10100 strikes.

“Fresh Put writing with Call unwinding is shifting its support to higher zones and giving the scope for fresh lifetime highs. Technically, Nifty made a strong Bullish candle and closed at the highest levels in last 14 trading sessions,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“It has to continue to hold above 10050 to extend its move towards lifetime high of 10178 then 10300 while on the downside supports are seen at 10020 then 9950,” he said.

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