Tech View: Bears gain edge as Nifty forms Bearish Belt Hold pattern

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NEW DELHI: The Nifty50 index on Monday fell for a third straight session to settle below the 10,750 level. During the session, the day tested the 10,700 level, before buying emerged at lower levels.

That said, the opening proved the day’s high as the index formed a ‘Bearish Belt Hold’ pattern on the daily chart. If Nifty stays below the 10,806 level on a sustainable basis, chances are that it may break below its swing low of 10,628 sooner than later, said analysts.

“The index broke the crucial daily moving averages and the rising trendline on the daily chart. It attempted a bearish breakout from the distribution triangle on intraday basis, but closed within the pattern. The stage looks set for the index to exhibit a downward breakout,” said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.

For the day, Nifty50 fell 57.35 points, or 0.53 per cent, to close at 10,737.60.

“The index slipped below its 50-day EMA and closed near its lower band of the last five trading sessions. The index needs to cross and hold above 10,777 to witness an upmove towards 10,880. If it fails to hold the same, it may drift towards 10,650-10,600 range,” said Chandan Taparia of Motilal Oswal Securities.

The daily momentum indicator has sent fresh sell signal with a bearish hook formation.

The action over the past few days clearly suggests a weak trend ahead, said Arun Kumar, Market Strategist at Reliance Securities.

A sustained selling pressure on the index below its long-term average of 10,806 for the next few trading sessions may lead to a bigger fall, the analyst added.

Ratnaparkhi said the weekly momentum indicator has completed the pullback cycle till the equilibrium line and looks ready for the new cycle on the downside.

As advance-decline ratio completely favoured the bears, traders will be better off to adopt a neutral stance till indices register a directional move, advised Mazhar Mohammad of Chartviewindia.in.

Source: Economic Times