NEW DELHI: Nifty50 closed above the 14,400 level on Thursday and formed a Reversal Piercing Line pattern on the daily chart.
During the day, the index saw a recovery from its 100-day EMA (exponential moving average). It eventually closed above its 100-day simple moving average (SMA). Analysts said the index recovered despite breaking below its crucial support at 14,250 level in the opening trade, which suggests it was a false breakout. They expect some further recovery in the coming days.
For the day, Nifty closed at 14,406, up 109 points or 0.77 per cent.
In a perfect Piercing Line pattern, the index needs to be close above the mid-point of the previous session’s candle body. In Thursday’s case, it would have been at 14,411.
“Today’s close is above the 100-day SMA of 14,361, which has been offering support to Nifty on a closing basis. There can be some strength in this recovery, and the pullback can initially expand towards 14,526 level and beyond that a bounce to 14,650 level can’t be ruled out,” said Mazhar Mohammad at Chartviewindia.in.
ETMarkets.comIndependent analyst Manish Shah said Thursday’s pattern was preceded by a Bullish Hammer on Monday. This is a bullish development, as buyers congregated at a very important support zone, he said.
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ETMarkets.com“The 14,300-14,250 zone was a key support for Nifty and it broke below this band only to rebound later. This is a case of a failed breakout. One wonders if the decline from the high of February 16 is coming to an end. If we put up Bollinger Bands on Nifty, we see there is a squeeze on the bands. This means market volatility has declined. On the lower time frame charts, the RSI oscillator is showing a positive divergence. If Nifty moves above the 14,550-14,560 band, expect it to move higher towards the 14,650-14,680 zone,” Shah said.
Chandan Taparia of Motilal Oswal Securities said Nifty needs to decisively hold above 14,400 level to witness a bounce towards 14,600 and 14,700 levels. On the downside, support exists at 14,250 and 14,150 levels, he said.
