NEW DELHI: Nifty50 rebounded on Tuesday after getting battered on Monday. The index formed what looked like a Bullish Harami Pattern on the daily chart, which generally signals a trend reversal. But analysts advised investors not to get carried away and look to lighten up positions on rallies.
“The sharp recovery certainly seems enticing, but still we advise not to get carried away as we may still not be out of the woods,” said Ruchit Jain of Angel Broking.
“The bearish gap area and the ‘20-day exponential moving average in the 14,650-14,700 zone remain a sturdy wall, which could be difficult to surpass immediately. On the flip side, the ‘89 DEMA’ will be a key support, as Nifty did not breach that and Monday’s low almost coincided with it. Traders should look to lighten up longs on pullback, as the index approaches its resistance zone,” Jain said.
Mazhar Mohammad, Chief Strategist at Chartviewindia.in, said Nifty saw some relief with a support of 100-day EMA, whose value is placed around 14,280 level.
“While this rally resulted in a Harami-like reversal formation, Monday’s sharp fall appears to have altered the medium-term picture in favour of the bears. Hence, such formations on the lower time frame charts may remain vulnerable to selloff on rallies. However, from a risk management perspective, one can look for relief rally by placing a stop loss below 14,300 level on a closing basis. If Nifty sustains above 14,280 level, it may initially expand to 14,600-652 zone,” he said.
