Technical View: Nifty forms Dragonfly Doji pattern, record high likely if index holds 12K

Technical View: Nifty forms Dragonfly Doji pattern, record high likely if index holds 12K



The Nifty50 witnessed volatility throughout the session on November 7 and closed above psychological 12,000 levels for the first time since June 4. The government’s Rs 25,000 crore booster dose for the real estate sector and positive developments in US-China trade deal lifted market sentiment.

The index formed a Dragonfly Doji pattern on the daily charts. In this pattern, the opening price is equal or similar to the high and close of the day.

A Dragonfly Doji pattern signals indecision among traders but it also points to the fact that bulls managed to bring the index towards the opening level. The index has to hold 12,000 for the bullish sentiment to continue.

Experts feel if the index holds 12,000 levels in the coming session, it could surpass its previous record high of 12,103.

The Nifty50 opened at 12,021.10, which was also an intraday high, and remained highly volatile during the day. The index touched a day’s low of 11,946.85 in the afternoon, but immediate recovery helped it remain positive and close 46 points higher at 12,012.

“This kind of formation is visible around potential turning points. Hence, in the next trading session, it looks inevitable for bulls to build on further gains by sustaining above 12,000 levels to retain positive bias. In that scenario Nifty may complete its formality of testing lifetime highs present around 12,103 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

Contrary to this, a close below 11,946 levels can bring bears back to the game by triggering profit booking. A short-term weakness in this regard will get confirmed on breach of 11,850 levels on a closing basis, he said.

As for last 6 trading sessions, the index has more or less witnessed indecisive formations on the back of tepid positive closes, he advised traders to remain neutral on the index and should focus more on stock-specific opportunities.

Bank Nifty tested the crucial resistance area of 30,800, but closed off day’s high at 30,647.75, up 0.12 points, forming small bearish candle on daily charts.

“A decisive breakout above this zone is needed by the bulls to bring back strong momentum for the index. Short term traders can look to book some profits here as the index meanders around the resistance zone. We recommend going long on a breakout above 30,800 zones. Bank Nifty is likely to test all-time highs of 31,780 once the breakout materialises,” Amit Shah, Technical Research Analyst with Indiabulls Ventures said.

The index has support at 29,700-29,500 while the resistance at 30,800-31,200, he added.Special Thursday Expiry on 10th 7th Nov
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