Spinning Top is often regarded as a neutral pattern which suggests indecisiveness on the part of both bulls as well as bears. It can be formed in an uptrend as well as in a downtrend.
The Nifty which started on a positive note failed to keep the momentum going and closed below its crucial 200-days exponential moving average (DEMA) for the second day in a row. It formed a small-bodied candle which closely resembles a ‘Spinning Top’ kind of indecisive pattern.
Spinning Top is often regarded as a neutral pattern which suggests indecisiveness on the part of both bulls as well as bears. It can be formed in an uptrend as well as in a downtrend.
The Nifty index opened gap up and negated its formation of lower highs - lower lows of the last four trading session. It came under selling pressure in afternoon trade and pulled the index below 200-DEMA placed around 10165, and 5-DEMA which was placed at 10,185.
Investors are advised to tread with caution ahead of the US Federal Reserve policy meeting. But, technically, there is a higher possibility that the market has bottomed out near 10,040 suggest experts.
The Nifty50 registered a Spinning Top kind of indecisive formation as it faced selling pressure after retracing 38.2% of its last leg of fall from the highs of 10478 levels. However, this intraday selling can be attributed to the nervousness ahead of the major global event in the for form Fed meeting
As more or less market appears to have factored in the outcome of the event it should ideally stabilisie and rally unless there are going to be some nasty surprises from the Fed which are beyond the anticipation of the market.
Mohammad further added that there is a higher possibility of a bottom around 10040 levels and hence post Fed outcome if the market stabilises then the rally should get extend up to the levels of 10380. “Contrary to this a decisive breach of 10130 levels on intraday basis may again drag down the indices towards critical support zone of 10040 – 9980 levels,” he said.
India VIX fell down by 3.22 percent at 15.10. A decline in volatility from the last two trading sessions is providing some comfort to the Bulls but needs to fall below 13.50-13 to process for a short-term reversal after the recent decline of around 1100 point.
On the options front, maximum Put open interest is placed at 10000 followed by 10100 strikes while maximum Call open interest is at 10500 followed by 10400 strikes.
Meaningful Put writing was seen at 10200 strikes which could act as a support while Call writing is seen at 10250 followed by 10300 and 10350 strikes.
Option band signifies a trading range between 10050 to 10350 zones. The Nifty remained volatile and formed a small Bodied Candle on the daily chart which indicates that bears are putting pressure at higher levels but at the same time Bulls are not loosening their grip after the recent bottom of 10049 levels.
Now, it has to continue to hold above 10141 zones to witness an up move towards 10276 then 10333 zones while on the downside supports are seen at 10050 then psychological 10000 marks.
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