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Tech view: Nifty50 forms small bullish candle, 11,400 level key

A recovery in late trade and a shift in support towards higher levels hinted at more upside.

Updated: Aug 01, 2018, 01.36 PM IST
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A recovery in late trade and a shift in support towards higher levels hinted at more upside.
NEW DELHI: The Nifty50 wiped out early losses to take its winning streak to the fourth straight session on Tuesday. In the process, it made a fresh closing high of 11,356 and formed a small bullish candle on the daily chart.

A recovery in late trade and a shift in support towards higher levels hinted at further upside. But a host of indicators are suggesting caution. It would be important to watch the resistance around the 11,400 level.

“A long body positive candle has been formed with a long lower shadow, which is indicating the emergence of buying interest from the lows. The upside momentum is still intact and intraday dips are being used as a buying opportunity. The unfilled opening upside gap of July 27 indicates we are in the middle of a trend and more upside is likely in the short term,” said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

The index needs to hold above 11,300 to extend its move towards 11,400 and 11,500 levels, said Chandan Taparia of Motilal Oswal Securities. On the downside, major support is seen at 11,250 and 11,171 levels.

For the day, the index rose 36.95 points, or 0.33 per cent. “At the beginning of the session, the bulls took a step back only to charge towards the end of the session. They did not allow the Nifty50 to fall even below the crucial hourly moving averages. This shows that the bulls are having an upper hand on the index,” said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.

This was the eighth session when the index formed higher high and higher low. "Following this sharp upward move, Nifty is approaching the upper end of a rising channel pattern placed at 11,400. A failure to take out this resistance line can trigger profit booking to 11,240 level. A trade above this level can extend the rise to 11,470-11,520 levels,” said Aditya Agarwala, Technical Analyst, YES Securities.

Meanwhile, the 14-day RSI has reached overbought levels at 82 level, suggesting that minor profit booking could be on the cards.

“The index is trading away from its short-term moving averages. A mean reversion phenomenon shall kick in any time, pulling the prices back to align with their averages. Trading may remain lacklustre ahead of RBI policy and any disappointment may act as an excuse to set the tone for a consolidation phase,” said Mazhar Mohammad of

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