Technicals: Nifty forms spinning top candlestick pattern on daily chart

By: | Published: July 13, 2016 6:00 PM

Nifty in its daily chart has formed a spinning top candlestick pattern. A spinning top is a neural candlestick pattern, indicates that despite several attempt in both direction market has failed to gain momentum and signal indecision about the direction.

Nifty technicals todayNifty in its daily chart has formed a spinning top candlestick pattern. A spinning top is a neural candlestick pattern, indicates that despite several attempt in both direction market has failed to gain momentum and signal indecision about the direction. (Photo: Reuters)

Nifty opened in Wednesday’s trading session with positive note mainly reacting to the better IIP data released Wednesday after market hour. However throughout the trading session market remain extremely range bound.

Nifty in its daily chart has formed a spinning top candlestick pattern. A spinning top is a neural candlestick pattern, indicates that despite several attempt in both direction market has failed to gain momentum and signal indecision about the direction. The range between the 8,550 to 8,500 is the key for the pattern. Going forward a break below the lower end of the range, market is likely to move down till the next support zone around 8,350-8,370.

In the stochastic indicator we can see that the indicator is consistently trading into the overbought zone. The distance between k% Moving average and d% Moving Average is narrowing, indicating lack of upside momentum and a short term correction is likely before we can expect another leg up. In MACD indicator the signal line, MACD line and histogram are all trading above the zero line indicating strong medium term up trend. According to this indicator, after a brief pause or consolidation market is likely to move up further.

Important support is at 8,500 and a move below this level trader should book partial profit from the existing long position and should re-enter around 8350-8370. Medium term up trend is likely to resume around this level and it is very unlikely that market will drop significantly below this level. On the upside resistance 8500-8520 is likely to offer short term supply.

(The author is founder and CEO at CapitalVia Global Research)

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