Tech View: Shooting Star on Nifty chart tells you buy-on-dips opportunity ahead

NEW DELHI: Nifty50 on Wednesday formed a Shooting Star candle on the daily chart, which is generally found in an uptrend and suggests a potential trend reversal. Analysts said while technical indicators are positive, a short-term correction cannot be ruled out. They advised investors to ‘buy on dips’.

During the day, gains in the index halted near the 78.6 per cent retracement of the February-April decline of 15,160, said Gaurav Ratnaparkhi of Sharekhan.

“With this dip, Nifty50 partially filled up a gap in the 15,043-14,938 zone. It has room to completely fill this gap on the downside. Near the lower end of the gap, however, the index is likely to attract fresh buying. So, ‘buy on dips’ is the preferred strategy from a short-term perspective,” he said.

Gaps do act as a support area after a breakout and it seems that the index declined to fill that gap, said independent analyst Manish Shah.

Check out the candlestick formations in the latest trading sessions

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“Nifty50 is trading above its 50-period and 20-period moving averages. We have not seen a crossover of the moving averages yet. This might eventually happen,” Shah said, suggesting support for the index in the 14,950-15,000 range.
“Any dips to this zone should provide a buying opportunity. On the lower timeframe charts, a break above 15,150 level can signal continuation of the bounce. Nifty50 offers one of the best buying opportunities in last three months and we should see a rally to the 15,450-15,500 zone before the end of current F&O series,” he said.

For the day, Nifty closed at 15,030, down 77.95 points or 0.52 per cent.

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At this point in time, “last Tuesday’s breakout is still intact. It can be whipsawed if the index closes below 14,938 level next session. Hence, it looks critical for the bulls to register a close above 15,137 level to tighten their grip on the market. On such a close, hopes of retesting lifetime highs around 15,431 level would rise. A close below 14,938 level in the next two sessions can reinstate the sideways trend with a possible range between 1,5150 and 14,600 levels,” said Mazhar Mohammad of Chartviewindia.in, who advised traders to remain neutral on the long side.
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