Tech view: Nifty50 forms bearish candle; further downside likely

image

Equities failed to capitalise on the opening gains, as the NSE benchmark Nifty fell over 180 points from the day’s high to end 0.57 per cent lower.

Nifty closed 58.30 points down at 10,245.25 after touching an intraday high and a low of 10,408.55 and 10,224, respectively.

Experts noted that Nifty50 resisted its important pattern resistance of 10,400, as it posted day’s high of 10,408.55. However, despite drifting and ending lower, the index managed to keep its head above the important support zone of 10,180-10,250.

In the process, Nifty signed off the day with a strong bearish candle on the daily chart.

“Monday’s intraday price action was clearly favouring the bears, as two attempts by the bulls, succumbed to the pressures, which succeeded in pushing the indices to lower levels. Once the bulls give up the psychological support at 10,200 level, bears will swiftly breach recent swing lows of 10,138, and eventually look to take the indices below 10,000 level,” said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.

The Nifty has fallen around 500 points in the last three sessions from the recent high of 10,710.

According market experts, a pullback rally cannot be ruled out, owing to profit booking by the short sellers ahead of the expiry.

“On such pullbacks, unless bulls manage a close above the 10,710 level, the trend shall continue to remain in favour of the bears,” added Mohammad.

In terms of the Fibonacci retracement, the Nifty has again tested 78.6 per cent retracement of the recent pullback.

There is a high probability that selling pressure may subside near this level, said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.

“In terms of the wave structure, the pullback that started from the 10,138 level, is subdividing into lower degree waves. At present, Nifty is in wave B of the pullback, and wave C i.e the next leg of the pullback, is expected on the upside. Hence, Nifty is expected to head towards 10,760-10,800 before breaching the recent low of 10,138,” said Ratnaparkhi.

On the upcoming trading session, Milan Vaishnav, Technical Analyst, Gemstone Equity Research and Advisory, said: “We expect a stable start once again and behaviour of the Nifty vis-a-vis the 10,180-10,250 level will be critically important.”

Source: Economic Times