NEW DELHI: Nifty50 on Monday snapped a three-day losing streak, but formed yet another indecisive candle on the daily scale. Monday’s candle had a long lower wick, something similar to Friday’s, suggesting every dip was being bought into.

Analysts said the 50-day simple moving average, whose value is placed at 11,555, is offering good support to the index. They believe the 11,750 level would pose an immediate hurdle for Nifty in the short term.

The back-to-back formation of two identical candle patterns, that too below a key overhead resistance at 11,750 level, suggests the bulls are preparing to surpass the hurdle shortly, said Nagaraj Shetti of HDFC Securities.

“Nifty50 formed a similar candlestick as the one formed on Friday with a long lower shadow, which can be called a Hammer candlestick. This formation, following a selloff, indicates a pause in the downtrend. Moreover, Nifty50 took support at the 50-DMA in two back-to-back sessions, confirming emergence of buying at lower levels. Therefore, a sustained trade above 11,750 level, which is acting as an immediate hurdle, can trigger a short-covering rally to 11,810-11,940 levels,” said Aditya Agarwala of YES Securities.

“If the bears ‘hammer’ the index below its immediate 50-DMA support line at 11,550, profit booking can stretch to 11,480 level,” Agarwala said.

For the day, Nifty closed at 11,669, up 26.75 points or 0.23 per cent. “On Tuesday, Nifty’s crucial supply zone will be in the 11,700-11,750 range. Any violation of the 11,550 level will cause weakness towards the 11,450-11,400 zone. The daily indicators continue to remain bearish and formed a negative crossover, which signalled weakness ahead,” said Rajesh Palviya of Axis Securities.

Mazhar Mohammad of said despite an intraday recovery, the advance-decline ratio remained in favour of the bears, which hinted at pain in the broader market.

If the bulls manage to defend the 11,500 level over the next few sessions, a sustainable bounce can be expected in the market. In the near term, bullish sentiment shall get strengthened on any close above the 11,750 level.

“Traders are advised to remain neutral on the long side whereas positional shorting can be considered on a close below 11,535 level for bigger targets,” he said.

Shetti said the index has sustained above the long-term trend line support around the 11,600 level on the weekly chart. “As Nifty is placed on the significant trend line support, as per the concept of changed polarity, one can’t rule out the possibility of a bounce in the near term,” he said.

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