Technical View | Bullish candle formation continues: 18,250 crucial for further upside

The Nifty50 recouped all its losses in the last hour of trade and closed the monthly F&O expiry session on a positive note on December 29 despite weakness in Asian counterparts, with a fall in volatility.

The index opened lower at 18,046, tracking correction in global peers amid recession fears, and fell a tad below the psychological 18,000 mark in the morning amid volatility, but posted a robust recovery in the last hour of trade to close at 18,191, up 68.50 points.

For the third straight session, the index smartly defended the 18,100 mark and continued the formation of a bullish candlestick pattern by making higher highs on the daily charts. The momentum oscillator RSI (relative strength index) at the 47 level largely retained an upward journey after testing the oversold zone.

Overall, the index has taken support at the 50-day exponential moving average of 18,165 and now seems ready to move towards 18,250, the 50-day simple moving average, which is crucial for a further northward journey, with key support levels at 18,100-18000, experts said.

Banking, metal, and oil & gas shares aided the market rally on Thursday.

“The Nifty took support near 18,000 and bounced back sharply. A bullish candle on daily charts and higher bottom formation on intraday charts are indicating further uptrend from the current levels,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.

For bulls, he feels 18,000 would act as a sacrosanct support zone, and above the same, it could move up to 18,280. In case of further upside, the index could move up to 18,400.

On the flip side, below 18,000, traders may prefer to exit from the trading long positions and below the same, the index could slip to 17,900, the market expert said.

On the Option front, the maximum Call open interest was seen at 18,200 strike, which is expected to be the crucial resistance area at the start of the January series, followed by 18,300 strike, with Call writing at 18,200 strike and then 18,300 strike.

On the Put side, the maximum open interest was seen at 18,000 strike, which is likely to be crucial support in January series, followed by 17,500 strike and 18,100 strike, with writing at 18,200 strike.

The above Option data suggested that the expected trading range for the Nifty50 could be 18,000-18,300 levels in coming sessions.

India VIX, the fear index, fell 3.78 percent to 14.81 level, from 15.40 level, making the trading ground favourable for bulls.

The Bank Nifty also started off trade lower at 42,685 and hit an intraday low of 42,490, but bounced back smartly in the last hour of trade and climbed up to 43,500 level, forming a long bullish candle on the daily frame.

The banking index closed above the median of the previous large bearish candle formed on December 21, rising 425 points to 43,252.

“The index remains in a buy mode and any dip should be an ideal opportunity to initiate long positions with immediate support at the 42,700-42,400 zone,” Kunal Shah, Senior Technical Analyst at LKP Securities said.

The momentum indicators are in the strong buying zone and the index is likely to head higher toward 44,000-45,000 zone, he feels.

The broader markets also closed higher but underperformed frontliners. The Nifty Midcap 100 index was up 0.08 percent and Smallcap 100 index gained 0.2 percent.

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