Bulls Pause as Nifty50 Forms ‘Hang­ing Man’ Pat­tern

The Economic Times - - Money -

A Hang­ing Man pat­tern on the can­dle­stick is a bear­ish pat­tern and is usu­ally formed at the end of an up­trend. Such in­de­ci­sive pat­terns on the tech­ni­cal charts for two con­sec­u­tive days in­di­cate that the bulls might be los­ing mo­men­tum.

In a Hang­ing Man pat­tern, the mar­ket wit­nesses sig­nif­i­cant sell­off to­wards the open­ing of a trad­ing ses­sion but the bulls then man­age to push the prices higher and the in­dex closes near the open­ing price.

The Nifty50 opened at 7,950.05 and hit an in­tra­day low of 7,877.55, thus form­ing a long down shadow. But there was no up­per shadow on the charts as the in­tra­day high was at ₹ 7,950.40. The in­dex re­cov­ered from its in­tra­day low to close at 7,914.75.

“This kind of price pat­tern clearly In­tra-day

sug­gests that the bulls are ready for a pause­asno­fur­ther­trig­ger­sare­vis­i­ble to carry on the mo­men­tum in the up­ward­di­rec­tion.Trader­sshould­be­cau­tious and wait for a short-term down­swing, which will get con­firmed once the Nifty50 slips be­low the 7,868 level,” Mazhar Mo­ham­mad, chief strate­gist - tech­ni­cal re­search and trad­ing ad­vi­sory, Chartviewin­dia.in said.

Traders should not con­clude that the bulls have lost con­trol and go short on the in­dex at cur­rent level. They should an­a­lyse chart pat­terns for the rest of the week. If the in­dex slips be­low its 200-DMA, that should be taken as a warn­ing sign that the bulls might be los­ing grip.

“The Nifty50 has formed a re­ver­sal can­dle­stick pat­tern for the sec­ond day inarow.Thein­dex­istrad­ing­be­lowthe im­por­tant re­sis­tance and psy­cho­log­i­cal level of 8,000,” Vivek Gupta, CMT - di­rec­tor re­search, Cap­i­talVia Global Re­search, said. “If Nifty50 con­firms Wed­nes­day’s re­ver­sal can­dle­stick by givin­ga­gap-downopeningand­clos­ing be­low to­day’s clos­ing level, we can ex­pect a short-term cor­rec­tion,” he said.

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