Tech View: Nifty may pull back towards short-term averages, analysts say buy on dips

NEW DELHI: Nifty50 on Thursday formed a small bullish candle on the daily scale and an indecisive Doji on the weekly scale, suggesting a pause in the ongoing trend.

Analysts said the possibility of the NSE barometer reverting back to its short-term moving averages is good. They see support for the index in the 17,250-200 range and expect the 17,450 level to pose immediate resistance.

For now, the weekly charts look strong.


"On the weekly time frame charts, the MACD remains bullish and ADX is also showing signs of a strong trend. There are no tell-tale signs of weakness. The Doji that we see on the weekly chart may turn out to be a Northern Doji; a trend continuation pattern," said independent analyst Manish Shah.

Despite the breakout continuation formation on the weekly scale, the index has formed a double top on the intraday charts, Shrikant Chouhan of Kotak Securities said, which indicates a temporary weakness.

"While the medium-term trend is still positive, traders may prefer to book profit near the resistance levels due to an overstretched rally. For the bulls, the 17,250 and 17,200 levels would be key support. Above the same, the uptrend is likely to continue up to 17,450-17,650 levels," Chouhan said.

The index closed at 17,369, up 15.75 points or 0.09 per cent. Stock exchanges would be shut on Friday on account of Ganesh Chaturthi.

Mazhar Mohammad of Chartviewindia.in said the index tested its five-day moving average at 17,300 level intraday, before recovering marginally.

"If Nifty50 sustains above 17,300 level, a bounce can be expected towards the 17,400 level. If the index slips below 17,250 level, the weakness will resume with the initial target of 17,000 level," he said.

Samco Securities Research said a mild pullback towards the short-term averages cannot be ruled out and advised traders to initiate long positions on dips to minimise the risk of being capitalised at extreme levels.