NEW DELHI: Nifty50 on Wednesday breached its 50-day moving average with ease and made a higher high-low formation for the fourth straight session. The index formed a bullish candle on the daily chart, similar to the one formed in the previous session.
Analysts said while the daily charts looked strong, the index could face strong resistance near the 14,950-15,000 zone in the coming days.
A breach of the key short-term moving averages such as 20-DMA and 50-DMA in three sessions clearly indicates the return of buoyancy to the market following three weeks of underperformance, said Aditya Agarwala of YES Securities.
“However, following the recent rise, the index is now approaching the overbought territory on the shorter time frame chart and a stiff resistance range in the 14,950-15,000 zone, which has been a cluster of recent highs. As Thursday’s session will see April series F&O expiry, bouts of profit booking below 14,800 level cannot be ruled out. On the flip side, if Nifty50 manages to sustain beyond 14,900 level, the uptrend may extend to 14,950-15,000 levels,” Agarwala said.
For the day, the index closed at 14,864, up 211 points or 1.44 per cent.
ETMarkets.comIndependent analyst Manish Shah said it was a high conviction close, a sort of candle that he was looking for.
“The location and the context in which the candle appeared seems to signal a massive comeback by the bulls. The index also closed above its 50-period moving average. The MACD has moved above the Signal Line, though it is still below the equilibrium level. Directional movement oscillators have also given a ‘buy’ signal. Besides, Nifty closed above the Falling Window of April 9 and violated a trendline coming down from the March highs. Nifty has resistance in the 14,980-15,000 zone and there could be selling around this level for a day or two,” Shah said.
Check out the candlestick formations in the latest trading sessions
ETMarkets.comMazhar Mohammad of Chartviewindia.in said the index needs to sustain above the bullish gap of 14,695-667 registered in Wednesday’s sessions, and a close below the said gap zone can be seen as the initial sign of weakness.
“Considering Thursday’s F&O expiry, traders are advised to remain neutral, as the market may remain volatile due to expiry-related actions,” he said.
