Tech View: Nifty50 forms bullish candle on daily charts

NEW DELHI: The Nifty50 reclaimed its crucial level of 8,450 on Tuesday and formed a bullish candle, which resembled a 'Bullish Belt Hold' pattern on the daily candlestick chart.

The market is likely to remain volatile ahead of the expiry of January series derivative contracts on Wednesday.

In a 'Bullish Belt Hold' pattern, the opening price becomes the lowest point of the day, as the bulls push the prices higher throughout the session to form a large body. The exact pattern has no lower shadow and a small upper shadow.

On Tuesday, the Nifty50 index opened at 8,407 and touched a high and low of 8,480 and 8,398, before closing 84.30 points higher at 8,475.
Likewise, the 30-share BSE Sensex closed 258 points up at 27,375. The index opened at 27,170 and touched a high and low of 27,393 and 27,140 during the session.

Chandan Taparia, Derivatives Analyst for Equity Research at Anand Rathi Financial Services, said: “The Nifty50 has formed a strong bullish or a ‘Bullish Belt Hold’ candle, which indicated that the bulls are back to cheer the pre-budget rally after the consolidation of last 10 sessions.”

On the options front, maximum Put open interest (OI) was seen at strike price 8,000 followed by strike price 8,400, while maximum Call OI was intact at strike price 8,500.

“We have seen fresh Put writing at strike prices 8,400, 8,450 and 8,500, which is likely to keep the index above the 8,450 level on day of settlement of the January series. While Call OI remained intact at strike price 8,500, it would restrict the upside at 8,510 and 8,555 levels,” Taparia said.

Mazhar Mohammad, Chief Strategist for Technical Research & Trading Advisory, Chartviewindia.in, said: “Considering the current breakout, traders can continue to maintain a positive stance as long as the Nifty50 sustains above the 8,398 level, which can be regarded as a stop loss for long trades.”