Nifty (8542.95, -07.95, -0.09%)
Generally, after a protracted downtrend a candlestick gravestone doji like formation gives rise to a pullback rally—this formation happens when the market opens near the day’s low goes up quite a bit and then again comes down at the end to close near the day’s low. For a perfect gravestone doji to happen the open and close must be at the same level. In yesterday’s market activity both the Nifty and the Bank Nifty showed this formation albeit not a perfect one. This essentially shows a flagging off of the downside momentum. Here, with only two more sessions to go before the March series of derivative contracts coming to an end, this essentially suggests a possibility of another round of short covering. We need to see if such a short covering led rally, that tapered off close to the anticipated supply zone between 8630 and 8655, hits a speed breaker around the same resistance area.
Generally, after a protracted downtrend a candlestick gravestone doji like formation gives rise to a pullback rally—this formation happens when the market opens near the day’s low goes up quite a bit and then again comes down at the end to close near the day’s low. For a perfect gravestone doji to happen the open and close must be at the same level. In yesterday’s market activity both the Nifty and the Bank Nifty showed this formation albeit not a perfect one. This essentially shows a flagging off of the downside momentum. Here, with only two more sessions to go before the March series of derivative contracts coming to an end, this essentially suggests a possibility of another round of short covering. We need to see if such a short covering led rally, that tapered off close to the anticipated supply zone between 8630 and 8655, hits a speed breaker around the same resistance area.
- Most critical levels for the day: 8532 (downside) and 8563 (upside)
- Strong support: 8532 – 8470
- Major support: 8420 – 8350
- Strong resistance: 8625 – 8664
- Major resistance: 8695 – 8725 and then 8798 – 8850
Bank Nifty (18331.45, -117.55, -0.64%)
The same commentary also applies for the Bank Nifty as indicated above. Here, once the level of 18470 is taken out it would have to face the acid test levels between 18579 and 18589. Once this latter range is decisively taken out only then you can expect any potential recovery swing to continue. On the downside, a sustained campaign below the yesterday’s low would negate the bullish implication of that imperfect gravestone doji formation.
- Most critical levels for the day: 18289 (downside) & 18470 (upside)
- Strong resistance: 18579 – 18589
- Major resistance: 18739 – 18811
- Strong support: 18317 – 18289
- Major support: 18050 - 17989
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