Tech View: Nifty forms bullish engulfing pattern on weekly chart. What traders should do on Monday

Headline equity index Nifty on Friday formed a small negative candle with a minor lower shadow on the daily charts and a bullish engulfing pattern on the weekly chart. Now, the index has to hold above 18,500 zone for an up move towards 18,600-18881, whereas supports are placed at 18,442 -18,250 zones, said Chandan Taparia of Motilal Oswal.

As reflected by the fear gauge index India VIX, volatility has been cooling off for the last nine weeks and supporting the bulls to hold at higher zones. The momentum indicator has reached the falling trendline on the daily timeframe.

What should traders do? Here’s what analysts said:

Rupak De, Senior Technical Analyst at LKP Securities
Based on the price chart and momentum indicator setup, we can infer that the index is on the verge of strong directional movement over the short term. On the lower end, a fall below 18,450 may trigger a correction towards 18,100-18,000, whereas, on the higher end, a rise above 18,605 may induce a decent rally in the market.

Ajit Mishra, VP - Research, Religare Broking
With the benchmark at a record high, improvement in the broader participation would play a critical role in shaping the market trend. Besides, the performance of the global markets will continue to weigh on the sentiment. We recommend following the trend and focusing on identifying the themes which could unfold ahead along with the present leaders.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas
The benchmark index can hover around the all-time high of 18604 for a while. This will be the make or break level to be monitored on a closing basis, which will determine further course of action not only from a short-term perspective but also for the medium term. The immediate support zone continues to be at 18400-18380.

Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The underlying trend of Nifty continues to be positive. Having surpassed the crucial upper resistance this week, the Nifty is expected to move into new all-time highs (above 18606 levels) by next week. A sustainable move above 18600 levels is likely to pull Nifty towards the new milestone of 18950 levels in the near term (0.786% Fibonacci extension taken from the June 22 bottom, September 22 top and Sept 22 higher bottom, as per weekly chart).

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)