Nifty outlook: Tech View: Nifty forms small bullish candle, enters consolidation phase

NEW DELHI: Nifty staged a smart rebound on Monday but still settle marginally lower for the day. The index formed a small bullish candle on the daily chart. The recovery occurred after Nifty tested its five-day exponential moving average around 12,220. Analysts said Nifty could be in for some consolidation in the coming days.

“Our twin momentum oscillators generated a sell signal, which usually foretells a sideways move with a negative bias. There seems to be limited upside as the market appears to have reached the overbought zone. Hence, a close below the 12,200 level shall tilt the tide in favour of the bears and can trigger a short-term downswing,” said Mazhar Mohammad of Chartviewindia.in.

For the day, Nifty closed at 12,266, down 5.65 points or 0.05 per cent. A gap-down opening at the start was bought into in the beginning itself. Another round of selling in the second half of the session got absorbed near the hourly lower Bollinger Band.

“Overall, the structure shows that the consolidation since the last couple of sessions is just a pause and the larger trend continues to be positive. The short-term target on the higher side is pegged at 12,350. The 12,220-12200 range will keep acting as a cushion for Nifty,” said Gaurav Ratnaparkhi of Sharekhan.

He said the support range will provide a fresh buying opportunity in the case of any dip. The sequence of making higher highs and lows of last seven sessions got interrupted during the day, said Chandan Taparia of Motilal Oswal Financial Services.

“Overall, the chart structure remains strong as long as Nifty50 sustains above its support zone at 12,150-12,200. We maintain our positive stance on the market for an up-move towards 12,350 and the 12,400 levels,” he said.