Nifty forms 'Doji' pattern, may consolidate unless index breaks 10,985 on upside

The Nifty50 closed rangebound session on a positive note Thursday and formed a 'Doji' kind of indecisive formation on daily candlestick charts. Positive global cues and the rally in Reliance Industries, TCS, HDFC and ITC helped the benchmark index end higher.

The 8 percent rally in Yes Bank after the appointment of Ravneet Singh Gill as new MD & CEO also lifted sentiment.

A 'Doji' is formed when the index opens and then closes approximately around the same level. However, it remains volatile throughout the trading day which is indicated by its long shadow on either side. The candle appears like a cross or a plus sign.

A Doji usually means indecisiveness among the bulls as well as bears, hence there could be some consolidation in coming sessions before directional move on either side, experts said.

The Nifty50 after opening marginally higher immediately slipped into red and hit an intraday low of 10,798.65, followed by rangebound move. The index after consolidation gained strength in late trade and touched a day's high of 10,866.60. It closed 18.30 points higher at 10,849.80.

Interestingly Nifty appears to be taking support around its 100-day simple moving average (10,795) which in the past acted as a resistnace point.

"Inline with its recent behaviour Nifty50 once again attracted buying on a dip towards its critical short term support points which resulted in a Doji kind of indecisive formation with a slightly longer lower shadow hinting positive price action for the day," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

He said lack of follow through selling to Wednesday's fall is suggesting that indices are caught up in a sideways zone and unless they emerge out if this sideways range a directional move will not emerge.

Today's bounce also coincided with the test of its 14-day old ascending channel support whose value is placed around 10,792 levels, he added.

Hence, he said in near term 10,790 appears to be a critical support breach of which may strengthen bearish sentiment for the short term with targets placed around 10,590 kind of levels where as upsides shall remain capped around 10,950.

Source:https://www.moneycontrol.com/news/business/markets/technical-view-nifty-forms-doji-pattern-may-consolidate-unless-index-breaks-10985-on-upside-3431151.html

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