Tech View: Nifty’s back-to-back bullish candles suggest a bottom is in place

Tech View: Nifty's back-to-back bullish candles suggest a bottom is in place

NEW DELHI: Nifty50 jumped on Wednesday and formed a bullish candle on the daily chart, for a second time in two days. Analysts said the fast retracement of the last leg of the fall is hinting that a short-term bottom is in place, and the index has resumed its rally after a brief halt.

They expect the index to drift towards the 11,750-800 zone in the coming days. For the day, Nifty closed at 14,644, up 123.55 points or 0.85 per cent.

“Nifty is on its Fifth Wave impulse move and the ongoing uptrend can extend beyond the recent peak of 11,795 to 12,065 and 12,400 levels. The 12,400 level is the 161.8 per cent Fibonacci extension level of the previous decline. On the downside, the immediate support is seen in the 11,620-11,560 range. Only a close below 11,550 level would halt the current bullishness. At index is currently on course to break out of its previous peak at 11,795,” said Aditya Agarwala, Senior Technical Analyst at YES Securities.

Agarwala advised investors to opt for the ‘buy on decline’ strategy.

Mazhar Mohammad of said the faster retracement of the last leg of fall is suggesting that a bottom is in place at the recent low of 14,222 level and the fresh leg of upswing is in progress.

“Ideally, sustaining above 14,500 level should extend the rally towards the 14,900 level. If the index slips below 14,500 level, some sort of consolidation can be expected. The trend may once again start favouring the bears only, when Nifty slips below 14,350 level. Therefore, traders are advised to buy the index on dips,” he said.

Mohammad advised investors to buy Nifty in the 14,600-550 range, by placing a stop below the 14,500 level on a closing basis and for a target of towards 14,900 level.

Chandan Taparia of Motilal Oswal Securities said Nifty has formed bullish candle on the daily chart and has continued with the formation of higher top and bottom for the last two sessions.

“It has to continue to hold above the 14,500 level to extend its move towards the 14,750 level. On the downside, the immediate support exists at 14450 and 14350 levels,” he said.

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