New Delhi: The Nifty50 formed a bullish candle on the daily chart on Friday.
The fact that it sustained its opening upward gap a day after forming a Hammer pattern may instil confidence among traders.On the weekly scale also, a perfect Hammer has sent out positive signals.
But as long as the index remains below 11,600 level, volatility may persist.For the day, the index rose 145 points, or 1.28 per cent, to settle at 11,515.
Earlier in the day, the index began with an upward gap of 73.60 points, which remained unfilled through the session, which is a positive indication.The negative sequence of lower tops and lower bottoms remains intact and the ongoing upward move could be in line with the new lower top of the sequence, said Nagaraj Shetti Technical Research Analyst at HDFC Securities.The lower top needs to be confirmed.
As such, Nifty holding below 11,600 level could be considered a continuation of this negative sequence.
Meanwhile, a Hammer pattern on the weekly chart indicates the possibility of a further upward move next week, Shetti said.Multiple buy signals are visible on the lower timeframe charts, said Mazhar Mohammad of Chartviewindia.in.A strong recovery in the last two sessions resulted in the formation of a perfect Hammer on the weekly chart, which should be a positive signal going forward.
In such a scenario, a logical target for the Nifty50 shall get extended up to 11,650 in case of positive momentum, as Mondays move is going to be influenced by the outcome of the governments review of the economy over the weekend, Mohammad said.He advised traders to maintain a stop loss below 11,380.