NEW DELHI: The Nifty50 negated the formation of higher highs on Monday and made a bearish candle similar to the 'Bearish Harami' pattern on the daily chart.
Traders are directionless, say analysts, who believe the index will see support at 10,700 level, while it may see resistance in the 10,830-50 range. Till the time the index decisively breaches this range, any strong direction is unlikely.
A 'Bearish Harami' followed by a 'Bullish Harami' pattern indicates that the bulls and the bears are not ready to loosen their grips and followup action was missing on both sides, said Chandan Taparia of Motilal Oswal Securities.
For the day, the Nifty50 fell 59.40 points, or 0.55 per cent, to close at 10,762. The 50-pack index continued to alternate between gains and losses for the fourth session. The market continued to shift into a high-low range of 10,820-10,720 in last few sessions, said Nagaraj Shetti of HDFC Securities.
"Niftys underlying trend is rangebound and this action is likely to continue for next session. The weekly timeframe chart pattern indicates limited upside for Nifty in the near term. Any decline below 10,700 level is likely to trigger a near-term downward correction in the market,” the expert said.
Mondays price action with a bearish formation post Fridays strong upmove clearly suggests this market is directionless, said Mazhar Mohammad of Chartviewindia.in.
The 10,700 level appears to be a critical support, whose breach should ideally enhance selling pressure with bright prospects for the Nifty to head towards the 10,400 mark. Till such a breakout is achieved on either side this market shall remain listless in the expiry week. It looks like traders will be better off adopting a neutral stance, Mohammad said.
RSI is also oscillating in a range from 40-60 points, affirming sideways consolidation, said Aditya Agarwala, Technical Analyst of YES Securities. This analyst sees the market in a broader range between 10,700 and 10,850 levels.
The hourly chart structure remains weak, but Nifty continues to sustain above its 20-day and 50-day SMAs, which indicate that its short- to medium-term trends will remain bullish. An immediate intraday hurdle is placed around the 10,780 level, said Rajesh Palviya of Axis Securities.