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According to Pivot charts, Nifty Index key support level is placed at 11,277.97, followed by 11,236.43. If the index starts moving upwards, key resistance levels to watch out are 11,344.57 and 11,369.63.
The Nifty50, after opening at fresh record high, erased gains after first hour of trade but managed to recoup those losses and remained higher for major part of the session on Monday.
The index continued its positive momentum, forming a 'Hanging Man' kind of pattern on the daily candlestick charts indicating that there could be some consolidation or correction going ahead.
A 'Hanging Man' is a bearish reversal candlestick pattern which is usually formed at the end of an uptrend or at the top (362-point rally from its recent low of 10,957.10 recorded on July 19). In a perfect 'Hanging Man' pattern either there will be a small upper shadow or no upper shadow at all, a small body and long lower shadow.
The Nifty after opening at fresh record high of 11,296.65 hit 10,300-mark for the first time but corrected after first hour of trade to hit day's low of 11,261.45. The index managed to recoup those losses in late morning trade and hit a new intraday high of 11,328.10.
It closed above 11,300 levels for the first time, rising 41.10 points to 11,319.50.
"Albeit Nifty50 opened the week on a positive note by the end of the day it registered Hanging Man kind of formation which is usually seen around short term turning points," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
He said however, a confirmation in this regard is required which will occur once Nifty50 slips below 11,261 levels triggering weakness on candlestick charts. "Interestingly this kind of weak pattern is accompanied by overbought levels on oscillator charts suggesting some sort of pull back.
Besides current price of index on short term charts is trading at much higher levels than its short term average prices suggesting that rally is due for a corrective and consolidation phase, he feels. Hence, it looks prudent for traders to book profits in next session and remain on sidelines till market correct and consolidate for couple of trading sessions, he said.
On dips traders can initiate buying between the gap zone of 11,210–11,185 registered on last Friday, Mohammad advised.
India VIX moved up by 1.52 percent to 12.49. Overall lower volatility suggests bulls are holding the tight grip on the market, experts said.
The Nifty Bank index closed at 27,842.60, up 208.2 points on Monday. The important Pivot level, which will act as crucial support for the index, is placed at 27,675.77, followed by 27,508.94. On the upside, key resistance levels are placed at 27,941.57, followed by 28,040.53.
Maximum call open interest (OI) of 28.05 lakh contracts was seen at the 11,500 strike price. This will act as a crucial resistance level for August series.
This was followed by the 11,400 strike price, which now holds 20.35 lakh contracts in open interest, and 11,300, which has accumulated 18 lakh contracts in open interest.
Call writing was seen at the stike price of 11,600, which added 4.16 lakh contracts, followed by 11,400 which added 2.8 lakh contracts and 11,300 which added 1.86 lakh contracts.
Call unwinding was seen at the strike price of 11,200, which shed 2.13 lakh contracts, followed by 11,100, which shed 0.9 lakh contracts.
