Nifty trend for Thursday

If you are a trader and missed few glimpses of Wednesday’s trading session, then you would realise that you haven’t missed much as Nifty ended with a minuscule gain of 4.70 points or 0.04 per cent.

Meanwhile, Nifty showcased a roller-coaster ride throughout the day and put traders on edge of their seats. It started the session on a flat note and gradually drifted lower but soon, the bear picked up the pace, and within no time, the index was trading below the 13,000 mark. However, in the last leg of the trade, Nifty recovered almost 130 points from the day’s low and ultimately, the bulls had the last laugh.

The opening, high and closing prices of the day were very much close to each other and this led to the formation of a ‘T-shaped candlestick’, which in technical parlance, is known as the Dragonfly Doji pattern.

Technically, Nifty failed to move above the previous high as Wednesday’s session was almost similar to Tuesday’s high. However, the long lower shadow of the Dragonfly Doji pattern indicates that an area of support was found at the low of the day, and buying pressure was able to push the price back to the opening levels. Also, if we look at the 75-minutes chart, Nifty rebounded from the 20- SMA and from the S1 level. Further, the low of the prior bar was not breached and with this, it has maintained a rhythm of higher lows.

However, one major concern is that in the last two trading sessions, it made a second attempt to negate the bearish implication of bearish engulfing pattern. If the index would have crossed and closed above the level of 13,145, it would have challenged the Doji formation, which was seen on the weekly chart last week. However, the repeated failed attempts are creating some suspicions, and hence, it’s important for the traders to keep a close watch on the 12,900 level as a breach of this level would result in a bearish implication.

The RSI on the 75-minutes chart, despite a smart recovery from the lower levels, has failed to cross above the 60-mark, while on the daily chart, the negative divergence persists. At the same time, the slope of the MACD histogram has almost flatted, which indicates the deceleration of the momentum.

So a lot would depend upon the level of 13,145. If Nifty manages to close above this level, then the upswing shall get extended towards the 13,300-13,500 mark.

A day before the weekly expiry: Let us check what option data is indicating.

• Till around 1-1.15, the 13,500 CE strike had the highest concentration of OI.
• Around 1.35 pm, there was a crossover as the 13,100 CE strike crossover 13,500 CE strike, and the maximum concentration of OI shifted to 13,100 CE strike.
• In the last leg of the trade, the maximum OI concentration shifted to 13,500 CE strike and the second maximum OI concentration shifted to 13,200 CE strike.

So this means that the immediate resistance is around 13,200 and once this resistance is taken-out, these at 13,200 CE strike could run for cover and there would be room for sizeable gains in the coming days. On the PE side, maximum OI concentration was seen around the 13,000 strikes.

If we sum-up the data and the price action, the zone of 13,145-13,200 is a crucial resistance and once it is taken out, it could lead to a quick run for 200-250 points.