Tech View: Spinning Top on weekly chart suggests a pause in uptrend

NEW DELHI: Nifty50 on Friday formed a Hammer-like candle on the daily chart and a Spinning Top on the weekly chart. Analysts said the index traded largely in a range during the week, and Friday’s gains from day’s lows suggested a consolidation ahead.

“Despite Friday’s strong bounce, the trading range for the week remained within 233 points, which is a cause for concern. After the rise, traders can retain a positive stance as long as Nifty sustains above the 12,730 level. Considering the price behaviour of last two sessions, we expect Nifty to consolidate in the 12,963-12,730 range,” said Mazhar Mohammad of Chartviewindia.in.

The session saw the index make a comeback from the low point at 12,730 even though it could not breach the 12,900 level in intraday trade. Nifty eventually closed at 12,859, up 0.68 per cent.

Aditya Agarwala, Senior Technical Analyst at YES Securities, said a Spinning Top on the weekly time frame chart after a bounce suggested a possible pause in the uptrend.

“A trade below the 12,750 mark may drag Nifty lower to 12,600 level. However, a sustained trade above the immediate hurdle in the 12,900-12,950 zone may resume the uptrend and take the index higher to 13,000-13,050 zone,” he said.

Check out the candlestick formations in the latest trading sessions

Nirali Shah, Senior Research Analyst at Samco Securities, said Nifty has formed a bullish reversal pattern, which opened with a gap near the high point of the week and then gave up all the gains.

“The velocity of the rally has been declining along with volume participation. In fact, Nifty50 has started facing resistance at the rising channel visible on the weekly chart, and might continue to struggle going forward as it lacks participation from the top index movers,” Shah said.