The Nifty which started with a small gap of over 20 points on Wednesday managed to close above its crucial resistance level of 9,133 which is a bullish sign for the market. It made a bullish candle as the closing level was higher than the opening level.
The candle is very similar to ‘spinning top’ kind of pattern on the daily candlestick charts which signify that bulls are losing conviction. The indecisiveness could also be due to derivative expiry and tomorrow could well be a trend day.
It is important to note that the index is already up by 2.29 percent in this series and is trading 100 points higher from its The volume-weighted average price (VWAP) which indicates that bulls have an upper hand.
A spinning top is formed when the real body is small but there is a wide range of movement throughout the trading day. This candle signals indecision between the bulls and the bears about the future direction of the market and can be formed in an uptrend as well as in a downtrend.
It will be interesting to see how Nifty50 moves on the March expiry day. The index climbed above its crucial resistance level of 9,133 and registered a highest daily close in last eight trading sessions which is the positive takeaway from Wednesday’s trading session.
The Nifty opened at 9,128 and rose to an intraday high of 9,153 which resulted in small upper shadow. It slipped to an intraday low of 9,109 which made a small lower shadow. It closed 43 points higher at 9,143.80.
“The Nifty registered a ‘Spinning Top’ kind of indecisive formation as it signed off the day with a meager gain of around half a percent. Albeit, it has closed above its immediate resistance of point of 9133 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Chillicious.com.
Investors should brace for some volatility ahead of March F&O expiry on Thursday and a slip below 9,100 could exert some bit of selling pressure while a break above 9,178 would strengthen the bullish argument.
The Advance Decline Ratio in Wednesday’s trading session should be a cause for concern unless it registers a sporadic breakout and registers a breakout above 9150. Although, based on the options data, March series is likely to expire in the 9,100-9,200 range.
The risk of a steep correction will only become valid if the index slips below 9,100 levels. Investors who are holding long positions should continue to maintain them as long as Nifty50 holds above 9,075.
“The Nifty index has been holding above its support trend line by connecting the lows of 8,713, 8,903 and 9,024 levels. It closed above immediate hurdle of 9,133 and registered a highest daily close in last eight trading sessions,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Chillicious.com.
“Till it holds above 9,075 zone, it has potential to extend its up move towards its lifetime high of 9,218 while on the downside supports are seen at 9,075 and then towards 9,020,” he said.
Nifty Bank, which hit a record high of 21,418.60, closed 165 points higher at 21,391. The index has been making higher highs – higher lows from last five trading sessions and surpassed its previous high of 21,336.
The index has immediate support near to 21,150 and if it continues to hold above 21,300 the rally could extend its up move towards 21,600, suggest experts.