Tech View: Nifty confirms pause in momentum, eyes 12,800 for revival

NEW DELHI: Nifty50 snapped an eight-day rally on Thursday after forming Hanging Man candles in the previous two sessions, thus confirming a pause in the ongoing momentum.

Unlike gap-up openings in the past couple of sessions, the index opened lower on Thursday and closed at nearly the same level. It formed an indecisive Doji and an Inside Bar on the daily chart. Analysts said as long as the index remains below 12,800 level, it would witness sideways movement with a negative bias.

For the day, Nifty closed at 12,690, down 58.35 points or 0.46 per cent.


While the index did not breach last Wednesday’s intraday low of 12,571 to confirm weakness on the price chart, certain momentum oscillators on the lower time frame charts slipped into ‘sell’ mode, said Mazhar Mohammad of Chartviewindia.in.

“Unless Nifty trades above 12,769 level on Friday, the market trajectory shall remain sideways with a negative bias. A close below 12,571 level can be harbinger of a fresh leg of short-term downswing. A fresh surge with a close above 12,800 level, on the other hand, can extend the rally towards 13,000 level. As our proprietary twin momentum oscillators generated a ‘sell’ signal, we expect the market to move sideways with a negative bias in the next couple of sessions," he said.

“The index formed a small Doji with an Inside Bar, which together formed a Harami Cross pattern on the daily scale. This pattern indicates a pause in the positive momentum. The index has negated the formation of higher highs of last seven sessions, but has not breached the previous day’s low. It has to hold above 12,550 level to witness a bounce towards 12,800 level. Downside support exists at 12,430 level,” said Chandan Taparia of Motilal Oswal Securities.

Inside Bars are normally considered as continuation patterns and Nifty at present is showing a strong trend, said independent analyst Manish Shah.

Check out the candlestick formations in the latest trading sessions

"The overlays and oscillators are pointing at sustained rise notwithstanding a short one-three day correction. Support for the index is seen in the 12,490-12,450 zone. Any short-term dip can be a buying opportunity,” Shah said.

Shrikant Chouhan of Kotak Securities said the index is in the consolidation mode and is preparing to move to 12,950-13,000 levels on the eve of Diwali.

"As long as Nifty does not break the 12,530 level, we should stick to the ‘buy on dips’ strategy,” he said.