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Tech View: Nifty forms small bullish candle, likely to move sideways now

In the coming session, the index may find resistance around the 12,400 level.

, ETMarkets.com|
Jan 14, 2020, 04.42 PM IST
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TECH VIEW SS
Its 14-day relative strength index at 61 level inched towards the 70 level, which is deemed overbought territory.
NEW DELHI: Nifty on Tuesday ended higher after trading in a narrow 66-point range, as investors lacked the confidence to take the index higher into the uncharted territory.

The index, which has been trading above its short-term moving averages, formed a small bullish candle on the daily chart. Analysts said it may remain sideways in the coming days.

In the coming session, the index may find resistance around the 12,400 level. A close below the 12,280 level could trigger short-term consolidation, they said.

On Tuesday, the index rose 32.75 points, or 0.27 per cent, to 12,362. Its 14-day relative strength index at 61 level inched towards the 70 level, which is deemed overbought territory.

“The index’s support has shifted higher to 12,330-12,280 zone, holding above which the current bullish momentum can stay intact. In that case, the index may see the next move towards the 12,400-12,450 zone, which is the immediate short-term hurdle,” said Rohit Singre, Senior Research Analyst at LKP Securities.

“Multiple technical parameters on the lower time frame charts are hinting at a sideways move with limited upside, as most of them are either in the overbought zone or displaying negative divergence,” said Mazhar Mohammad of Chartviewindia.in.

“Weakness may not emerge instantly as there are no apparent sell signals. Moreover, the daily MACD generated a buy signal in today’s session. However, its impact can be limited as the market has already rallied in last four sessions. Besides, a similar ‘buy’ signal from the MACD in last December around the 12,200 level failed to add incremental gains to Nifty, which had topped out in next two sessions,” Mohammad said.

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