Nifty made a bullish candle on the daily chart with a long lower shadow which indicates that bulls are in a dominant position and every small decline is being bought in.
A Hanging Man is a bearish reversal candlestick pattern usually formed at the end of an uptrend or at the top (around 804-point rally from its recent low of 13,328 recorded on December 21). 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.
After starting the day higher at 14104, Nifty turned volatile to hit an intraday low of 13953 in the morning. Nifty immediately recouped losses and gains to hit the day high of 14147. Nifty closed at 14132, rising 114 points.
It breached its previous day’s low but continues its winning streak of forming higher highs since the last eight trading sessions.
Nifty remained positive for most of the session and closed at a record high, boosted by the Indian drug regulator's emergency use nod to two COVID-19 vaccines and on positive global cues. Auto, technology, metals and pharma stocks led the rally.
As the price chart is looking extremely bullish, a weakness in the Nifty shall not be expected unless it breaches the critical short-term support present at around 13950 level on a closing basis.
If the bulls manage to push the index beyond 14148, then the rally shall initially extend towards 14280 level. If the Nifty breaches 13950 on a closing basis, then it can trigger a downswing, offering an opportunity to trade on the short side.
As the momentum strongly favours the bulls, Traders with a high-risk appetite should look to intraday dips with a stop below 13950 for a target of 14270.
Except bank (down marginally) all other sectoral indices ended in the green led by the metal, IT, auto and pharma. Midcap and Smallcap indices jumped over 1 percent each.