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The Nifty 50 rebounded after two days of correction and formed a Bullish Engulfing candlestick pattern on the daily charts on February 27, but overall, it has been in a range of 21,950-22,300. Hence, the index needs to break the range on either side to get into a firm direction, experts said, adding if the index decisively manages to surpass 22,300 then 22,500 is the level to watch out on the higher side.
However, on the lower side, 21,950 remains a key support, which coincides with the 21-day EMA (exponential moving average), according to experts.
Bullish Engulfing is a bullish reversal pattern formed at the downtrend, wherein the green candle completely engulfed the previous day’s red candle. However, the placement of the pattern is not convincing enough to call this an important bullish reversal pattern.
The Nifty 50 remained rangebound with a positive bias and closed 76 points higher at 22,198.
“The near-term uptrend status of Nifty remains positive and bullish chart patterns like higher tops and bottoms are also intact. At the same time, the market is not gaining strength to witness upside breakout of 22,200-22,300 levels decisively,” Nagaraj Shetti, senior technical research analyst at HDFC Securities said.
He feels the immediate resistance is at 22,300 and any dips down to 22,000-21,950 could be a buy-on-dip opportunity.
On the options front, the 23,000 strike owned the maximum Call open interest followed by the 22,500 strike and 22,800 strike with meaningful Call writing at the 22,800 strike and then at the 22,500 strike, while on the Put side, the maximum open interest was seen at 21,500 strike followed by 22,000 strike with writing at 21,500 strike and then 22,000 strike.
The above options data also indicated that 22,500 is expected to be a key hurdle for the Nifty 50 on the higher side, with support at 22,000.
Bank Nifty
The Bank Nifty ended the volatile session with moderate gains, after a consistent downfall in the previous four straight sessions. The banking index was up 12 points at 46,588 and formed a bullish candlestick pattern.
The index not only defended the 21-day EMA (46,350) but also the downward-sloping resistance trendline which now has been acting as a support.
“Bank Nifty has been rangebound between 46,300-47,400. In Tuesday’s trading session it held on to the 40-day average (46,300) and bounced back,” Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas said.
He expects the positive momentum to continue over the next few trading sessions. “On the upside immediate hurdle is placed at 47,000 and above that 47,200,” Gedia said.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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Technical View: 22,300 remains crucial for further upmove in Nifty, Bank Nifty defends 21 DEMA – Moneycontrol
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