NEW DELHI: Nifty50 scaled fresh high on Tuesday, but could not top the 12,900 mark. The index, which took out the psychologically important mark at the open, tested the 12,800 level in intraday trade before closing above 12,870 and formed a ‘Hanging Man’ candle on the daily chart.
Such a formation is a cause for concern, said Mazhar Mohammad of Chartviewindia.in.
“This formation, which usually reflects exhaustion among the bulls, occurs around the potential turning points. On Tuesday, the formation was accompanied by an intraday bearishness, as Nifty50 failed to add on to the strong gap-up start and closed way below its opening level, raising doubts over further strength in the ongoing bounce,” Mohammad said and suggested that a failure to climb the 12,797 level may confirm weakness.
Nagaraj Shetti, Technical Research Analyst at HDFC Securities, said the 12,850-12,900 range will now be the make-or-break area in the short term. “An inability to generate further strength could result in minor weakness from the high in next 1-2 sessions. A decisive move above this hurdle can open the next upside target of 13,500 over the next couple of weeks,” he said.
For the day, Nifty closed at 12,874, up 93.95 points or 0.74 per cent.
Ashis Biswas, Head of Technical Research at CapitalVia Global Research, said there is significant divergence in many oscillators. He advised market participants to use any rally to book profit rather than build fresh positions. He sees the 12,930-12,950 range on Nifty50 as a supply zone.
Aditya Agarwala of YES Securities said the uptrend is losing momentum and one can witness a minor pause or correction in the coming sessions. “Moreover, the RSI has started forming negative divergences on the shorter timeframe charts, confirming that the uptrend is maturing now. A trade below the 12,800 level will trigger a correction to the 12,740-12,650 zone. On the upside, the 12,900 level will act as a key resistance,” Agarwala said.
Chandan Taparia of Motilal Oswal Securities said the index has to hold above 12,750 to witness a bounce towards the 13,000 level. On the downside, major support exists in the 12,600-12,550 zone.
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