Tech View: Nifty 50 forms a long bullish candle on weekly charts. What traders should do next week

Snapping Thursday’s losses, equities rose in trade on Friday and ended at record closing levels as the Reserve Bank of India’s policy action was on expected lines and as Governor Shaktikanta Das sounded dovish.

The Nifty 50 ended at 20969.40 points, up 68.25 points or 0.3% from the previous close, led primarily by the gains in banks after the RBI allowed a reversal of liquidity facilities under both the standing deposit facility and marginal standing facility during weekends and holidays to facilitate better management of funds.

On a week-on-week basis, the 50-stock index has gained 3.5% and has formed a long bullish candle, while holding higher bottom formation on daily and intraday charts, which is largely positive, says Amol Athawale, Vice President – Technical Research, Kotak Securities.

“We are of the view that the market texture is bullish and any meaningful correction should be taken as a buying opportunity to add good quality stocks,” he said.

For the index traders now, 20,800-20,700 would act as sacrosanct support zones, while 21,200-21,300 could be the profit booking areas for the short-term traders.

However, below 20,700, the uptrend would be vulnerable, Athawale said.

Volatility gauge India VIX declined for the second straight session and ended nearly 2% down at 12.47 points.Here’s what other experts have to say on the market trajectory for next week.

Rupak De, senior technical analyst, LKP Securities
Going forward, 21,000 is likely to act as a crucial level for the Nifty, as call writers have built their maximum positions at that strike price. A resumption of the current uptrend might be seen above 21,000, with the potential to reach to 21,550.

On the lower end, put writers have built significant positions at 20,900 and 20,800; below these levels, profit booking might increase.

Nagaraj Shetti, senior technical research analyst, HDFC Securities
A small positive candle was formed on the daily charts with upper and lower shadows. Technically, this pattern indicates the formation of a high wave type candle pattern, and the market action reflects high volatility at the new highs.

Normally, such high-wave candle formations at the swing highs or the hurdle more often act as a top reversal post-confirmation. But, having formed this pattern amidst range movement, the negative pattern implication could be less.

The near-term uptrend status of the market remains intact and present consolidation or minor weakness could eventually result in Nifty resuming its sharp upside further in the short term. The next overhead resistance to be watched is around 21550 and immediate support is at 20,850 levels.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)