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Technical View: Nifty forms ‘Doji’ pattern, 10,928 crucial for further upside

The Nifty50 opened flattish and remained in narrow range of 50 points for most part of the session in the absence of any fresh news or triggers from both domestic and global markets. The index closed flat and formed ‘Doji’ kind of pattern on the daily charts.

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A ‘Doji’ is formed when the index opens and then closes approximately around the same level. However, it remains volatile throughout the trading day which is indicated by its long shadow on either side. The candle appears like a cross or a plus sign.

A Doji usually means indecisiveness among the bulls as well as bears, hence there could be some consolidation in coming sessions before directional move on either side, experts said.

The Nifty50 after opening marginally higher at 10,899.65 hit an intraday high of 10,928.15 and low of 10,876.90. The index closed at 10,890.30, up 3.50 points over previous close.

“It appears to be a day of consolidation on the bourses as Nifty50 moved in a narrow range of 51 points and registered an indecisive formation called Doji before signing off the session,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

He said this kind of price behaviour can be suggesting a mild pause in the current upswing post strong breakout witnessed in last Tuesday’s session.

Hence, to pick up pace once again Nifty needs to get past 10,928 levels in next couple of sessions, he added.

According to him, the index may undergo profit booking if it trades below 10,876 levels for atleast one hour in next session.

Nevertheless, traders can consider such weakness owing to profit booking as an opportunity to create fresh long positions as long as indices sustain above 10,777 kind of levels and look for initial targets of 10,985 breach of which shall accelerate the upmove further, Mazhar said.

India VIX moved up by 3.19 percent at 16.07 levels. Volatility has to cool down further to get a decisive range breakout.

On the option front, maximum Put open interest (OI) is at 10,500 followed by 10,700 strike while maximum Call OI is at 11,000 followed by 11,200 strike.

Put writing is at 10,900 strike while Call unwinding is at most of the immediate strikes with minor Call writing at 11,200 strike. Option band signifies a higher shift in trading range in between 10,750 to 11,000 zones.

“The Nifty index formed a Doji Candle on daily scale but managed to hold above its falling supply trend line by connecting swing highs of 10,985, 10,923 and 10,870 levels and its 50 DEMA,” Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Now the index needs to hold above 10,800 zones to extend its move towards 10,985-11,000 zones while on the downside support exists at 10,777 levels, he added.

Bank Nifty managed to surpass its previous day high but consolidated for entire trading session. The index closed 82.95 points higher at 27,483.70 and formed a small bodied candle on daily scale.”Now the index has to continue to hold above 27,350 zones to witness an upmove towards 27,750 zones while immediate support exists at 27,150 zones,” Chandan said.