Technical View: Nifty forms ‘Hammer’ pattern on weekly charts, next crucial target seen at 10,985 – Moneycontrol.com
The market started off January series on a strong note with the Nifty50 closing above 10,850 levels amid thin trade, extending gains for third consecutive session on Friday. Positive lead from Wall Street and rally in banking & financials stocks lifted investor sentiment.
The index formed bullish candle on the daily charts and ‘Hammer’ kind of pattern on the weekly scale. It closed a percent higher during the week.
A Hammer which is a bullish reversal pattern is formed after a decline while a Hanging Man is a bearish reversal pattern. A Hammer consists of no upper shadow, a small body, and long lower shadow.
The long lower shadow of the Hammer signifies that it tested its support where demand was located and then bounced back.
After the sharp run in last three sessions, the market is expected to consolidate in coming session, but if its upmove continues then the Nifty50 could move towards its psychological 11,000 levels, experts said.
The Nifty50 after opening sharply at 10,820.95 extended gains as the day progressed and touched an intraday high of 10,893.60. A bit of profit booking was seen in late trade but the index did not break 10,850 levels. It closed 80.10 points higher at 10,859.90.
“Nifty index opened positive and witnessed buying interest towards 10,900 zones. It formed a Bullish candle on daily scale and Hammer candle on weekly scale which implies decline is being bought into the market,” Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited told Moneycontrol.
He said now till the index holds above 10,750-10,777 zones it can extend it move towards crucial hurdle of 10,985 levels while on the downside support exists at 10,777 levels.
India VIX fell by 4.98 percent to 15.27 levels.
On the option front, maximum Call open interest (OI) was at 11,200 followed by 11,000 strike while maximum Put OI was at 10,500 followed by 10,000 strikes.
Call writing was seen at 11,200 followed by 10,900 strike while Put writing was seen at 10,800 followed by 10,900 strike. Option band signifies a broader trading range in between 10,650 to 11,000 zones.
Bank Nifty traded in narrow range of 27,050-27,250 zones for most part of the trading session. It formed an Inside Bar on daily scale and Hammer candle on weekly scale which suggests buying is visible at lower levels. The index closed at 27,125.25, higher by 246.70 points from previous close.
“Now till it holds above 26,850 zones it can extend its move towards 27,350 then 27,500 levels while on the downside major support exists at 26,666 zones,” Chandan Taparia said.