NEW DELHI: The Nifty50 staged a smart rebound on Monday to settle above the 10,250 mark, forming a long bullish candle on the daily chart.
Analysts are cautiously optimistic, as they feel the index needs to take out the 10,290 level first to instil confidence in the market.There is a possibility that the index can form an Expanded Flat structure, in which case the pullback can stretch higher, said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.
Alternatively, Nifty can take the form of a wedge pattern.
In that case, the market can continue to be volatile with an overall downward bias.
From a short- to medium-term perspective, the weight of evidence is still in favour of the bears with the possibility for Nifty tumbling back to 10,000, 9,952 levels, he said.
For the day, the index rose 220.85 points, or 2.20 per cent, to close at 10250.
The long bull candle indicates a near-term bottom reversal, but the negative sequence of lower tops and bottoms is still intact, said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.Shetti feels Friday's low of 10,004 could be considered as a new lower bottom of the sequence and expects index to hit the 10,400 mark in the next 3-4 sessions.Chandan Taparia of Motilal Oswal Financial Services said the index has seen a positive divergence with the technical indicators turning from the deep oversold territory.It has to hold above 10,180-10,200 zone to extend its bounce towards 10,333 and 10450 levels.
On the downside, support exists at 10,180 and 10,138 levels, he said.Mazhar Mohammad of Chartviewindia.in said one must maintain a tight stop for long positions below the 10,020 level.
In case, the strength gets extended beyond 10,450, this pullback swing shall eventually expand up to 10,700 level.