For any potential upside, the index needs to take out its all-time high of 9,928 level on a closing basis, which at Friday’s close was still 10-15 points away.
The index hit the 9,928 level on July 17 and was unable to get a hold of the 9,900 level on a closing basis ever since. A ‘Hanging Man’ pattern is formed when the index witnesses significant downside in early trade, but the bulls manage to push it back to the opening level.
“The Nifty50 appears to be stuck in the 9,930-9,800 range, as the bulls appear to be in no mood to give up. A directional move is likely to emerge only after the breakout of this range. Traders are advised to stay on the sidelines and take a call once a directional move emerges,” said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in.
The Nifty50 opened on a higher note and stayed in the positive terrain for most of the morning session. The index, though, saw selling pressure as the session progressed. It fell to sub-9,850 level, before seeing a rebound that took the index to 9,915 at close. The index ended the day 41.95 points, or 0.42 per cent, higher.
“The index has seen a decisive close above 9,900. Now followup buying led by short covering could make the market cheerful to test the 10,000 mark next week,” said Chandan Taparia of Motilal Oswal Securities.
Mohammad said the 9,790 level appears critical, whereas the 9,930 mark seems to be a major barrier for the bulls.
“But the more index rallies, the bulls will be more prone to higher risk. A fresh breakout on the index can be expected only when it closes above the 10,000 mark, which can extend the rally further on the upside,” he said.