Technical View: Nifty reclaims 100-DEMA, forms Long White Day on charts

The Nifty50 which started with a gap-up build up momentum in the second half of the trading session to reclaims its crucial 100-days exponential moving average (DEMA) placed around 10,410 on Monday. It made a strong bullish candle or Long White Day on the daily charts.

Most experts were already signaling a bounce back in Indian markets in their commentary and hit happened on the first trading day of the week after witnessing a decline of over 2 percent for the week ended March 9.

The index is now trading above its crucial short-term moving averages which is a positive sign for the bulls. But, Supertrend and MACD are both in SELL mode. If the bounce back sustains, we could see these indicators turning to a buy.

The Nifty50 which opened at 10,301 rose to an intraday high of 10,433. It slipped marginally to hit an intraday low of 10,295 but managed to close 194 points higher at 10,421.

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As long as Nifty is trading above its 100-DEMA, bulls have nothing to fear. Traders can remain long on the index with a stop below 10,295.

“Bulls made a strong come back with a vengeance as they witnessed sustained buying throughout the session before registering Long White Day kind of candle formation. Monday’s upmove is looking quite broad-based as almost all sectors registered more than one percent gain barring PSU banking space and real estate,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

“With this upmove, indices closed not only above its critical short-term averages but also marginally above its 100 Day Exponential Moving Average. Though it will be too early to conclude that a fresh leg of uptrend started from the recent lows of 10141 its possibility can’t be ruled out if indices get past 10631 levels by next two sessions,” he said.

Mohammad further added that for time being traders need to remain cautious as indices are staring at critical resistance point of 10450 and a close above this in next session can further boost the morale of the bulls and cement the bullish sentiment in the short run.

He further added that traders can retain optimistic stance in the near term till indices sustain above 10295 levels and look for an initial target of 10630 going forward.moneycontrol

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