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Tech View: Nifty forms Doji as bulls turn indecisive at 12,000

NEW DELHI: Nifty50 on Monday climbed for the eighth session in a row, but that didn’t inspire confidence as the index gave up most of the day’s gains.The day saw the index erase gains from a swing high of 12,022, before adding up marginally. It was all reflected in a Doji candle that got formed on the daily chart, which suggested indecisiveness among traders at higher levels . Weakness may creep in now, warned analysts, who see support for Nifty at 10,850-10,790 levels.”As Nifty50 saw a mild selloff from the critical psychological resistance , our twin momentum oscillators generated a ‘sell’ signal. We expect either a sideways movement or a dip towards 11,800 now. A slightly bigger correction can be expected if Nifty50 closes below 11,790 level,” said Mazhar Mohammad of the day, the index closed at 11,930, up 16.75 points or 0.14 per cent.Nagaraj Shetti, Technical Research Analyst at HDFC Securities , believes Monday’s pattern could be considered as a High Wave, which reflects high volatility in the market at swing highs.”Sometimes, the formation of such wave patterns signals reversal of the ongoing trend after a confirmation. Though Nifty50 has stretched its uptrend into the eighth consecutive session, there is still no confirmation of any reversal pattern at the highs. We expect a minor consolidation for one or two sessions,” Shetti said, noting that a similar Doji was recently nullified and Nifty reclaimed the 11,900 level.”If the bulls fail to take the index beyond the 11,970-12,000 resistance zone, it will trigger profit booking and drag Nifty lower to 11,800-11,750 levels. However, a sustained trade above 12,000 level will resume the uptrend and take the index higher to 12,100-12,250 levels,” said Aditya Agarwala of YES Securities.Independent analyst Manish Shah said momentum oscillator MACD is now in the buy mode. “The RSI is standing above 60 and the ADX has started moving above 20. Often ADX moving above 20 is a sign that the index will see a fast move on the upside. The previous decline has been retracted fully and the market breadth is good. As long as Nifty holds above the 11,800 level, the underlying tone stays bullish,” Shah said. Read from source….