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Tech View: Nifty forms indecisive Doji, may disrupt the ongoing rally

Before closing 59 points, higher at 11,999, the index hit an intraday high of 12,038.

, ETMarkets.com|
Nov 20, 2019, 05.16 PM IST
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Tech View: Nifty forms Inside Bar, shows sign of a downward leg too
Analysts believe some profit booking at higher levels also capped the upside.
Nifty50 closed higher for the second successive session on Wednesday. Overall, it was a mixed session for the domestic equity market. On the one side, the index attempted to penetrate the crucial resistance zone while on the other hand, it came off from its high point before ending just shy of the 12,000 mark.

Before closing 59 points, or 0.49 per cent, higher at 11,999, the index hit an intraday high and low of 12,038 and 11,966, respectively. However, it opened the day at 12,004. During the process, it formed a ‘Doji’ formation on the daily chart.

“Nifty failed to penetrate the 12,000-12,050 zone and saw paring of gains from the high of 12,038. This kept the index within the broader consolidation zone between 11,800 and 12,050 levels. In the process, a ‘Doji’ occurred. If the Doji occurs during a rally and near the high point, it may potentially disrupt the rally, although it needs confirmation on the next trading day,” said Milan Vaishnav, CMT, MSTA, Consultant Technical Analyst at Gemstone Equity Research & Advisory Services.

Analysts believe some profit booking at higher levels also capped the upside.

“Profit booking dragged the index below the 12,000 mark. A Doji pattern on the daily chart suggests indecision in the market. The overall structure still looks convincing and traders can use a buy-on-dips strategy near the support zone in the 11,950-11,900 range. The index still has good resistance in the 12,050-12,100 zone,” said Rohit Singre, Senior Technical Analyst, LKP Securities.

Going ahead, there is a weekly options expiry on Thursday. The Call open interest (OI) increased on strike price 12,000 compared with Put, as this level witnessed maximum activity. At present, the highest Put OI stays at 11,900, while the highest Call OI has shifted to strike price 12,000.

“With weekly options expiry due on Thursday, Nifty’s behaviour vis-a-vis the 12,000 mark will be crucial, as this level may continue to pose stiff resistance for the market,” Vaishnav said. He recommended avoiding excessive exposures on either side, as the index is yet to achieve a breakout and see a sustainable directional bias.

Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia, said the bulls at this juncture need a strong close above the 12,000 mark to get back the confidence, which can eventually lead to new highs beyond 12,103 level.


“On the downside, a close below the 11,966 mark can once again push Nifty towards its critical support at the 13-day exponential moving average, whose value is placed around the 11,884 mark. Considering the lackadaisical movement of the index from the low of 11,802, traders are advised to remain neutral on the directional bet,” he said.

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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