New Delhi: The Nifty50 recorded its longest winning streak since August-September 2014 on Tuesday. The index has been slowly approaching the 'overbought zone' after nine days of consecutive gains.
The bulls looked tired, as the index swung in a narrow 65-point range during the session but seemed not ready to give in yet. In all likelihood, the index may consolidate in the coming sessions.
For the day, the index rose 20.35 points, or 0.19 per cent, to close at 10,548. “It registered a Hanging Man pattern on the daily chart, suggesting exhaustion of momentum. Interestingly, this kind of pattern is emerging close to its critical resistance zone placed around the 10,600 level. Even though there was no sell signal on the short-term charts, consolidation or running correction cant be ruled out when the index reaches the overbought zone," said Mazhar Mohammad of Chartviewindia.in.
A Hanging Man candle implies followup buying was missing at higher levels, said Chandan Taparia. The index has made higher highs from last 12 consecutive sessions, which indicates that the bulls are still in command, Taparia said.
The Nifty50 is now approaching its critical resistance level at 10,562, which is the 50 per cent Fibonacci retracement of the entire fall from 11,171 to 9,951. If the index sustains above 10,565 level, it will trigger an upside momentum towards 10,600 and 10,640 levels, said Rajesh Palviya at Axis Securities.
“On the downside, the 10,500 level remains a crucial support to watch out for. Any breakdown below 10,500 will encourage more profit booking, which could lead Nifty towards 10,440 and 10,380 levels,” Palviya said.
Mohammad said short-term traders may book profit and wait for either a correction or breakout above the 10,630 level.
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