Nifty50 Forms Long Bear­ish Can­dle

The Economic Times - - Money -

timesin­ter­net.in ETMar­kets.com: The Nifty50 failed to hold above its cru­cial psy­cho­log­i­cal level of 8,800 on Wed­nes­day and formed a long bear­ish can­dle on the daily can­dle­stick chart.

The in­dex closed be­low its open­ing level for the sev­enth con­sec­u­tive day in a row, which sug­gests that the bulls are los­ing mo­men­tum and the bears are slowly mak­ing their way to get an up­per hand on Dalal Street.

How­ever, it still can’t be treated as a break­down, be­cause the Nifty50 re­spected its cru­cial sup­port level of 8,720. How­ever, a break be­low 8,720 this week can put fur­ther pres­sure on the bulls, which could take the in­dex to­wards 8,650-8,620 lev­els, ex­perts said.

The in­dex did break be­low its 10-day sim­ple mov­ing av­er­age, which acted as a cru­cial sup­port in last four out of seven ses­sions. The mov­ing av­er­age is placed at 8,770 on the daily charts.

A bear­ish can­dle is formed when the clos­ing value is be­low the open value of the can­dle, ir­re­spec­tive of how much the gap be­tween the close and open level.

The Nifty50, which opened at 8,778, rose to an in­tra­day high of 8,807, but the bears in­ten­si­fied sell­ing pres­sure and pushed the in­dex be­low the 8,800 level to close at 8,724.

“The RSI has given a sell sig­nal by turn­ing from its over­bought state and now a fol­lowup buy­ing be­low 8,720 level can push it to­wards 8,650 lev­els. On the up­side, 8,800 and 8,820 lev­els may act as bar­ri­ers over the next cou­ple of ses­sions,” Chan­dan Ta­paria, as­so­ciate vice-pres­i­dent, an­a­lyst - De­riv­a­tives at Moti­lal Oswal Se­cu­riti e s, told ETMar­kets.com.

“The Nifty50 formed a neg­a­tive or a bear­ish can­dle on chart, fol­lowed by an in­side can­dle pat­tern. It has closed near its sup­port trend line by con­nect­ing the lows of 8,685 and 8,715 lev­els,” he said.

How­ever, this one day’s neg­a­tive price ac­tion shall not be the be­gin­ning of short-term down­trend, as the Nifty50 is placed close to dual sup­port lev­els around 8,700 level, ex­perts said.

“If the Nifty50 breaches be­low its sup­port at 8,700 on a clos­ing ba­sis, it will open up new down­side tar­gets for the in­dex close to 8,500 level,” Mazhar Mo­ham­mad, chief strate gist-tech­ni­cal re­search and trad­ing Ad­vi­sory, Chartviewin­dia.in, told ETMar­kets.com.

“For the time be­ing, up­sides shall re­main capped around 8,800 level and the bulls need to get past 8,827 l e ve l to re­gain their strength,” it said. Me­chan­i­cal in­di­ca­tors such as MACD and RSI have given a sell sig­nal, as they have turned from the over­bought state with the de­cline in the broader mar­ket.

“It failed to sur­pass its hur­dles at the 8,820 level. Till it doesn’t sur­pass it, it would be tough for the bulls to get a grip on the mar­ket while hold­ing be­low 8,720 and sell in­di­ca­tion from me­chan­i­cal in­di­ca­tors may give the bears a chance to grab the short­ing op­por­tu­nity,” Ta­paria said.

If the Nifty50 goes be­low its sup­port at 8,700 on a clos­ing ba­sis, it will open up new down­side tar­gets for the in­dex close to 8,500 level

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