Tech view: Nifty50 forms ‘Inside Bar’; big hurdle ahead at 9,800-9,820

NEW DELHI: The Nifty50 erased morning gains to settle marginally higher on Tuesday. In the process, the index formed an ‘Inside Bar’ on the daily chart. Analysts believe the index may face strong resistance in the 9,800-9,820 range, while a breach of the 9,700 level may trigger a selling spree.

Mazhar Mohammad, Chief Strategist for Technical Research & Trading Advisory at Chartviewindia.in, said lack of follow through to Monday’s selloff can be considered a slightly positive sign for the indices. If Nifty sustains above the 9,685 level, it can trigger a bounce towards the 9,900 mark.

“The Nifty50 faces resistance at 9,840-9,900 in the medium term, while in the very short term, we see resistance at 9,800. Supports are seen at strike prices 9,700 and 9,680. A decisive move will come only if these levels are breached on a closing basis in the short term,” said Mustafa Nadeem, CEO, Epic Research.

Nadeem said since the index is in an intermediate correction phase, the primary trend being bullish, a sharp drop towards lower support levels shall work well for momentum players.

The Nifty50 opened above the 9,800 level and hit a high of 9,828, before selling emerged. The index closed 11.20 points, or 0.11 per cent, up at 9,765.

Chandan Taparia of Motilal Oswal Securities said the index closed below its 50-day EMA for last two consecutive sessions, which has negative implications. It is just a few points away from the major support trend line that connects the lows of 9,088, 9,448, 9,685 and 9,720.
“If this trend line is broken decisively then short term trend may continue its pace of selling pressure towards 9,650 and 9,600 levels,” he said.

Taparia expects the Nifty50 to face resistance at 9,820 and 9,850 mark on the upside.

Mohammad said any bounce beyond 9,947 on a closing basis shall instil more confidence among the bulls.