NEW DELHI: Nifty50 on Monday took its winning run into the third day in a row. During the session, the index tested its immediate resistance in the 10,350-10,400 range, before closed below it.

While forming higher highs and lows, the index made an indecisive Doji, as the opening and closing levels of the index were almost the same. “One cannot rule out profit booking at higher levels,” said analysts, who believe ‘buy on dips’ would be the right strategy in this market.

“The index continued to form higher lows for the sixth consecutive session, but formed a Doji candle as it closed near to its opening mark. The outlook is positive as the index has been moving in a Rising Channel, with buying interest in many heavyweight counters. But the RSI indicator has made a negative crossover on the hourly scale, which suggests a pause in the positive momentum,” said Chandan Taparia of Motilal Oswal Financial Services.

Taparia, who expects support for the index to shift towards 10,180 and 10,040 levels, said the overall trend in the market could remain bullish with a “buy on decline” strategy. “The index has to hold above 10,250,” he said, “to extend the ongoing move towards 10,500 level.”

For the day, Nifty rose 66.80 points, or 0.65 per cent, to 10,311.

“A pullback, correction or profit booking is absolutely normal and can always take the index to 10,200-10,000 levels. We can use a ‘buy on dips’ approach for a target of 10,500,” said Manish Hathiramani, Technical Analyst at Deen Dayal Investments.

Check out the candlestick formations in the latest trading sessions

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Mazhar Mohammad of Chartviewindia.in said a few momentum oscillators on the lower time charts have slipped into the overbought zone and this was accompanied by a possible negative divergence on the RSI indicator, which failed to make a higher top in line with the price chart.

“If the index slips below 10,277 level in the next trading session, it can undergo intraday profit booking, which may result in either consolidation or testing of its 100-day moving average, whose value is placed around 10,074 level in next one or two sessions,” Mohammad said.

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