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Tech View: Nifty forms small bullish candle; upside looks capped

Nifty has the potential to scale 12,400 in the short term, but gains will be shortlived.

, ETMarkets.com|
Last Updated: Jan 13, 2020, 05.42 PM IST
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NEW DELHI: Nifty50 on Monday topped the 12,300 mark, and while doing so, took out a crucial resistance at the 12,290 level. The index formed a small bullish candle on the daily chart.

Analysts said the index has the potential to scale the 12,400 mark in the short term, but gains will be shortlived. They noted that the index is moving above its short-term moving average and sooner than later it may slip into a consolidation mode.

A trade above the 12,320 level will push Nifty to the 12,370-12,400 zone, which also happens to be the upper end of the rising channel, said Aditya Agarwala of YES Securities. A trade below 12,290 may halt the ongoing bullish trend, triggering correction to the 12,260-12,210 zone, he added.

For the day, the index rose 72.75 points or 0.59 per cent to close at a record high of 12,329.55.

Rohit Singre, Senior Technical Analyst at LKP Securities said the index has given a fresh breakout above the 12,290 level, and this zone will now act as a good support.

“If the index manages to hold above the same, the northward movement will continue. In such a case, Nifty will face resistance at 12,400. One should use these levels to book profit in longs," he added.

The 14-day relative strength index (RSI) for the index stood at 60.42.

"The upside appears to be stretched. Hence, any weakness in the coming session can be expected if Nifty trades below 12,285 with intraday target of 12,224. Contrary to this, if the index sustains above 12,337, then upside may extend towards 12,400. But any such rally will be shortlived," said Mazhar Mohammad of Chartviewindia.in.

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