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Tech View: Nifty50 forms bearish candle, may head to 15,600 level

NEW DELHI: Nifty50 on Thursday faced selling from the word go. It fell below the immediate support range at 15,800-15,779 with ease and eventually formed a bearish candle on the daily chart.

Analysts said the bulls’ failure to take the index above the 15,900 level has triggered weakness. In case the index fails to recover, it may reach levels around the 15,635-600 zone, they said.

“To prevent further damage, Nifty50 needs to sustain above 15,680 level on Friday, as a close below that level can strengthen the bearish sentiment further, as it would amount to a breakdown on the daily line chart on which Nifty is moving in a tight range between 15,880 and 15,680 levels. Strength is unlikely unless the index closes above 15,900 level,” said Mazhar Mohammad at Chartviewindia.in.

The index closed the day at 15,727, down 151.75 points or 0.96 per cent. During the day, Nifty faced resistance near the daily upper Bollinger Band, said Gaurav Ratnaparkhi of Sharekhan.

“The sideways action over the past several sessions has developed an Ascending Triangle pattern and the index moved down to complete the pattern. The selling pressure was absorbed near the lower end of the pattern as well as near the 78.6 per cent retracement of the recent rise. From here on the index is expected to take a leap towards 15,900 level,” Ratnaparkhi said.

He, however, said a breach of the swing low of 15,635 will negate the pattern formation.

In numbers, the index has been moving in the 15,450-15,915 range in the last 27 trading sessions, said Chandan Taparia of Motilal Oswal Securities, who noted that a decisive directional move is missing.

“Now, it has to cross and hold above 15,750 to witness a bounce towards 15,850 and 15,915 levels. On the downside, supports exist at 15,600 and 15,500 levels,” he said.

Shrikant Chouhan at Kotak Securities said the index has formed a lower top formation, which indicates further weakness from the prevailing level.

“For the next few sessions, the 15,780 level could act as an important resistance for traders and below the same, a correction could continue up to 15,635 level,” he said.

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