Technical Analysis: Nifty's Opening Marubozu Candle Signals Positive Sentiment and Potential Rise Beyond 18,800

Rajesh
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On June 13, the bulls charged right from the start as the Nifty50 index closed above the 18,700 mark, marking a significant milestone after four consecutive sessions of positive gains. This impressive performance was supported by several factors, including a drop in May inflation and robust Industrial Production (IIP) numbers for April. Additionally, market participants eagerly awaited the interest rate decision by the US Federal Reserve, which was scheduled to be announced on June 14. Although the auto sector experienced a decline, buying activity across other sectors contributed to the bullish sentiment.

Nifty50 Performance and Technical Analysis

The Nifty50 began the day with a gap up opening at 18,632, which coincidentally served as the intraday low. As the day progressed, the index extended its gains, reaching a high of 18,729. Finally, the Nifty50 settled at 18,716, recording a substantial gain of 115 points. The formation of an Opening Marubozu candlestick pattern on the daily charts indicated a clear dominance of the bulls on Dalal Street.

The Opening Bullish Marubozu candle can also be interpreted as a Bullish Belt Hold pattern, commonly observed during downtrends. This pattern represents extreme bullish behavior and is characterized by a long green body with an upper shadow but no lower shadow.

Market Outlook and Expert Analysis

Experts anticipate that the Nifty50's strong momentum, following recent consolidation and correction, will continue to drive the index towards the 18,800-18,900 levels. Initial support is expected around the 18,600 mark, while the crucial support level lies at 18,500. Osho Krishan, Senior Analyst of Technical & Derivative Research at Angel One, stated that the Nifty50 is hovering near the upper band of consolidation, eagerly awaiting a positive trigger for a breakout. He further emphasized that the 18,600 zone is likely to cushion any minor setbacks, with the sacrosanct support at the 18,500 mark. Krishan advised market participants to closely monitor global markets, as further relief could act as a catalyst for the next leg of the rally towards the lifetime high zone of 18,888. The overall technical structure appears robust, and the index is expected to sustain its momentum in the near term.

Option Data and Analysis

Option data indicates that the 18,700-18,900 range is expected to pose a crucial resistance area for the Nifty50 going forward. However, if the index manages to hold above the 18,700 mark, it could potentially move towards the 18,900-19,000 levels. On the put side, the maximum open interest was observed at the 18,700 strike, followed by the 18,600 and 18,500 strikes. There was notable writing activity at similar strikes.

Bank Nifty Analysis

While the Bank Nifty settled above the 44,000 mark, it underperformed compared to equity benchmarks and broader markets, closing at 44,080 with a rise of 136 points. The index formed a bullish candlestick pattern on the daily charts following a three-day correction.

The Bank Nifty index has been trading in a sideways consolidation phase, indicating a lack of clear directional bias. Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities, identified the immediate resistance level for the index at 44,200, which has hindered further upward movement. A successful breakout above this resistance level could potentially trigger trending moves, signaling a bullish sentiment. Shah noted that the index has support at 43,700, which has successfully prevented significant declines. If this support level remains intact, it could present a buying opportunity for market participants.

Broader Market Performance

The broader markets displayed strength, with the Nifty Midcap 100 and Smallcap 100 indices rising by 1.22 percent and 0.7 percent, respectively. Positive breadth was observed, while the fear index, India VIX, dropped to 11.11 levels, down by 1.2 percent from 11.25 levels.

Conclusion

The Nifty50 bulls demonstrated their dominance on Dalal Street, with the index closing above the 18,700 mark for the first time in four straight sessions. Supported by positive market sentiment, a drop in inflation, and healthy IIP numbers, the index showcased strong momentum following recent consolidation and correction. Experts predict further upward movement, with the Nifty50 likely to move towards the 18,800-18,900 levels. However, resistance in the 18,700-18,900 range should be closely monitored. The Bank Nifty remained in a consolidation phase, with potential for a breakout above the immediate resistance level. The broader markets also exhibited strength, signaling positive market breadth. As market participants await the US Federal Reserve's interest rate decision, continued vigilance and analysis of global markets are advised to identify potential catalysts for further upward movement.

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