NEW DELHI: Nifty50 came under selling pressure on Thursday, tracking weak global cues. The index negated higher highs and lows , and eventually formed an indecisive ‘Doji‘ candle on the daily chart, raising concerns among analysts whether the index saw a ‘false breakout‘ on Tuesday.
The index is expected to stay range-bound, and sentiment is likely to turn negative should Nifty fall below its 20-day moving average, whose value is placed at 11,186 level.
“Nifty50 registered a Doji, with a gap-down opening, perhaps hinting at the failure of the recent breakout. If it is true, the index may turn sideways with a negative bias. However, a breach of the 20-day EMA, which successfully offered support in the recent past, may confirm a short-term trend reversal. That said, there seems to be a good amount of support in the 11,250-11,187 zone,” said Mazhar Mohammad of Chartviewindia.in.
On Thursday, Nifty saw high volatility before closing the day at 11,312, down 96.20 points or 0.84 per cent.
Rajesh Palviya of Axis Securities said Nifty formed a bearish gap in the 11,394-11,361 range in Wednesday’s trade, which should now be a key resistance zone to watch out for.
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“Gaps are surprises that denote huge psychological barriers for traders,” said independent analyst Manish Shah. “In case Nifty manages to move above the top end of the gap at 11,395, it would mean that gap is closed and Nifty is likely to trade higher,” he said.
Aditya Agarwala of YES Securities says he would be optimistic as long as Nifty sustains above 11,290 level in the coming sessions. If this happens, the index may see a short-covering rally towards the 11,400-11,450 zone. A fall below 11,290 level may send the index towards 11,240-11,200 zone, he said.
Chandan Taparia of Motilal Oswal Securities said the index is in the process of forming a ‘Spinning Top’ candle on a weekly scale. “Price formation indicates that declines are being bought into, but followup buying momentum is missing at higher levels. The index needs to surpass the recent swing highs to commence the next move,” he said.