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Tech view: Nifty forms bullish candle, but undercurrent is weak

After Tuesday, the daily MACD reported a negative crossover & trades below its signal line.

Updated: Aug 14, 2018, 05.34 PM IST
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After Tuesday, the daily MACD reported a negative crossover and trades below its signal line.
Contrary to expectations, NSE’s Nifty50 index made a strong comeback on Tuesday and formed a robust bullish candle even as it erased all the losses of the previous session. The 50-share Nifty pack closed 79.35 points, or 0.70 per cent, higher for the day at 11,435.

The index opened the day at 11,381 and touched an intraday high and low of 11,452 and 11,370, respectively.

After Tuesday’s session, the daily MACD reported a negative crossover and now trades below its signal line. No other significant formation was observed on the candles.

“On the face of it price chart is suggesting bullishness, but technical oscillators on lower time frame charts are still on sell mode with the daily MACD triggering a fresh sell signal in Tuesday’s session, which is a cause for concern,” said Mazhar Mohammad, Chief Strategist – Technical Research and Trading Advisory,

MACD is moving average convergence divergence and is used to capture trend reversal in the market.

Analysts said to confirm more strength in this leg of upswing, Nifty50 needs a strong close above 11,500 level.

“This current leg of upswing can be expected to initially extend towards 11,615 level. As the technical picture is looking mixed as of now, traders are advised to remain cautiously optimistic with a stop loss below 11,367,” he said.

“We expect the market to remain vulnerable to bouts of profit taking at higher levels and remain in a broad trading range,” said Milan Vaishnav, Technical Analyst, Gemstone Equity Research and Advisory.

The domestic equity market will remain closed on Wednesday on account of Independence Day.

On the options front, maximum Put open interest (OI) stood at 11,000 followed by 11,200, while maximum Call OI was at 11,500 followed by 11,600. There was meaningful Put writing at 11,400 and 11,500 levels, whereas Call writing was seen at 11,700, followed by 10,600.

“The option band signified a hold in the current trading band between 11,350 and 11,500 and then 11,600 levels,” said Chandan Taparia, Technical & Derivative Analyst, Motilal Oswal Securities.

Also Read

Tech View: Nifty forms bearish candle, but outlook unchanged

Tech View: Piercing Line on Nifty chart shows buying at lower levels

Tech View: Nifty forms Bearish Belt Hold pattern; showing fatigue

Tech View: Nifty forms ‘Bearish Belt Hold’; bears in full control

Tech View: Bearish candle after Doji signals possible trend reversal

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