Technical View: Nifty forms bearish candle, immediate hurdle remains at 12K
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Experts advise traders to remain neutral on the long side till the Nifty closes above 11,990 levels.
The Nifty closed in the red on November 5 after remaining the green in seven consecutive sessions, which suggests that bulls are taking a breather.
The index formed a bearish candle that resembles a Hanging Man pattern on the daily charts.
The pattern indicates some negative reversal in the coming session if the index breaks and closes below 11,850 levels, experts say.
A Hanging Man is a bearish reversal pattern that is usually formed at the end of an uptrend or at the top (around 358-point rally in previous seven consecutive sessions).
In a perfect Hanging Man pattern, either there will be a small upper shadow or no upper shadow at all, a small body and a long lower shadow.
The Nifty opened higher at 11,974.60 to immediately hit a day's high of 11,978.95, but remained volatile throughout the session. It made many attempts to stay in the green but failed and hit the day's low of 11,861.90 in afternoon. It trimmed some losses in the last hour of the trade to close at 11,917.20.
"Weakness appears to be slowly creeping into the Nifty50,
To regain strength, it was imperative that the bulls push the index beyond 11,989 levels on closing basis, he said. In such a scenario, the bulls could make an attempt to retest life-time highs of 12,103 levels.
But, if the bears manage a close below 11,843 then it should trigger more profit booking, which could unleash a short-term downswing, with eventual targets placed in the 11,740-11,700 zone, he said.
Mohammad advised traders to remain neutral on the long side till the Nifty closed above 11,990 levels, whereas fresh shorting opportunity shall arise on a close below 11,860 levels for a initial target of 11,740.
On monthly options front, maximum Put open interest was seen at 11,600 followed by 11,300 strike, while maximum Call open interest was seen at 12,000 followed by 11,800 strike.
We have seen Put writing at 11,300 and 11,200 strike, while marginal Call writing was seen at 12,200 strike.
The options data suggests that the Nifty could trade in a broader range of 11,600-12,100.
The broader markets corrected more than the frontliners, as the Nifty Midcap index was down 1.08 percent and Smallcap index lost 0.84 percent.
India VIX closed flattish at 15.91 levels, which indicates a rangebound bias with a limited downside and upside for the next few trading sessions.
The Bank Nifty negated the formation of higher lows of the last four trading sessions and closed negative after making gains in seven consecutive sessions.
It closed 0.37 percent lower at 30,219.85 and formed a bearish candle on the daily scale, as it failed to surpass its crucial hurdle of 30,800 in the last trading session.
"It has to continue to hold above 30,000 to witness an upmove towards 30,600 then 30,800 levels, while on the downside, supports are seen at 30,000 then 29,750 levels,"
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Experts advise traders to remain neutral on the long side till the Nifty closes above 11,990 levels.
The Nifty closed in the red on November 5 after remaining the green in seven consecutive sessions, which suggests that bulls are taking a breather.
The index formed a bearish candle that resembles a Hanging Man pattern on the daily charts.
The pattern indicates some negative reversal in the coming session if the index breaks and closes below 11,850 levels, experts say.
A Hanging Man is a bearish reversal pattern that is usually formed at the end of an uptrend or at the top (around 358-point rally in previous seven consecutive sessions).
In a perfect Hanging Man pattern, either there will be a small upper shadow or no upper shadow at all, a small body and a long lower shadow.
The Nifty opened higher at 11,974.60 to immediately hit a day's high of 11,978.95, but remained volatile throughout the session. It made many attempts to stay in the green but failed and hit the day's low of 11,861.90 in afternoon. It trimmed some losses in the last hour of the trade to close at 11,917.20.
"Weakness appears to be slowly creeping into the Nifty50,
To regain strength, it was imperative that the bulls push the index beyond 11,989 levels on closing basis, he said. In such a scenario, the bulls could make an attempt to retest life-time highs of 12,103 levels.
But, if the bears manage a close below 11,843 then it should trigger more profit booking, which could unleash a short-term downswing, with eventual targets placed in the 11,740-11,700 zone, he said.
Mohammad advised traders to remain neutral on the long side till the Nifty closed above 11,990 levels, whereas fresh shorting opportunity shall arise on a close below 11,860 levels for a initial target of 11,740.
On monthly options front, maximum Put open interest was seen at 11,600 followed by 11,300 strike, while maximum Call open interest was seen at 12,000 followed by 11,800 strike.
We have seen Put writing at 11,300 and 11,200 strike, while marginal Call writing was seen at 12,200 strike.
The options data suggests that the Nifty could trade in a broader range of 11,600-12,100.
The broader markets corrected more than the frontliners, as the Nifty Midcap index was down 1.08 percent and Smallcap index lost 0.84 percent.
India VIX closed flattish at 15.91 levels, which indicates a rangebound bias with a limited downside and upside for the next few trading sessions.
The Bank Nifty negated the formation of higher lows of the last four trading sessions and closed negative after making gains in seven consecutive sessions.
It closed 0.37 percent lower at 30,219.85 and formed a bearish candle on the daily scale, as it failed to surpass its crucial hurdle of 30,800 in the last trading session.
"It has to continue to hold above 30,000 to witness an upmove towards 30,600 then 30,800 levels, while on the downside, supports are seen at 30,000 then 29,750 levels,"
#Market Edge #Nifty #Sensex #Technicals