Tech view: Nifty50 forms ‘Inverted Hammer’, bears to take over if Nifty slips below 8,975
NEW DELHI: The Nifty50 had a poor show on Wednesday. First, it slipped below the immediate resistance range between 9,100 and 9,050 levels amid a global selloff. And then, it fell below its five-day and 10-day EMAs in a single session. The index now has support at the 15-day EMA at 9,021. At close, the index made a pattern similar to the ‘Inverted Hammer’ on the daily chart.
This pattern was formed following a ‘Hammer’ formation in the previous session and a ‘Bearish Belt Hold' pattern a day earlier. While Wednesday’s fall in the index was caused by global selloff, the bulls in the local market were not comfortable at all.
“Momentum traders (the bulls) had to take it on the chin as we saw a surprise gap-down opening, citing the extremely overnight negative cues from the US market,” said Sameet Chavan, Chief Analyst for Technical & Derivatives at Angel Broking.
That said, if Wednesday’s selloff is followed up by a higher opening on Thursday and a bullish candle is formed, it may signal a trend reversal.
“The Nifty50 is trading close to the lower boundary of a channel support and inside the critical gap zone between 9,060 and 8,975 levels logged on March 12. Hence, a bounce from this zone can’t be ruled out in the immediate term. If the Nifty50 fails to sustain above the 8,975 mark on a closing basis, it shall push the indices to the bear grip for a prolonged period,” said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in
The index opened with a gap down. Never during the entire session did it manage to enter the positive terrain. After hitting a low of 9,019, what it could do is close 91 points, or 1 per cent, lower at 9,030.
The NSE benchmark has formed lower highs and lower lows in last three sessions and requires to negate the same before stability returns to market.
“Now if the Nifty50 manages to cross and hold above the 9,075 mark, only then may we see a move towards 9,119 and then 9,160 levels. On the downside, supports are seen at 8,980 and 8,920 levels,” said Chandan Taparia, Derivatives & Technical Analyst at Motilal Oswal Securities.
Chavan said traders waiting for dips to initiate fresh long positions should not get carried away by the pessimism. “The chart structure remains positive as long as the 8,850 level is not broken on a closing basis,” he said.
This pattern was formed following a ‘Hammer’ formation in the previous session and a ‘Bearish Belt Hold' pattern a day earlier. While Wednesday’s fall in the index was caused by global selloff, the bulls in the local market were not comfortable at all.
“Momentum traders (the bulls) had to take it on the chin as we saw a surprise gap-down opening, citing the extremely overnight negative cues from the US market,” said Sameet Chavan, Chief Analyst for Technical & Derivatives at Angel Broking.
That said, if Wednesday’s selloff is followed up by a higher opening on Thursday and a bullish candle is formed, it may signal a trend reversal.
“The Nifty50 is trading close to the lower boundary of a channel support and inside the critical gap zone between 9,060 and 8,975 levels logged on March 12. Hence, a bounce from this zone can’t be ruled out in the immediate term. If the Nifty50 fails to sustain above the 8,975 mark on a closing basis, it shall push the indices to the bear grip for a prolonged period,” said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in
The index opened with a gap down. Never during the entire session did it manage to enter the positive terrain. After hitting a low of 9,019, what it could do is close 91 points, or 1 per cent, lower at 9,030.
The NSE benchmark has formed lower highs and lower lows in last three sessions and requires to negate the same before stability returns to market.
“Now if the Nifty50 manages to cross and hold above the 9,075 mark, only then may we see a move towards 9,119 and then 9,160 levels. On the downside, supports are seen at 8,980 and 8,920 levels,” said Chandan Taparia, Derivatives & Technical Analyst at Motilal Oswal Securities.
Chavan said traders waiting for dips to initiate fresh long positions should not get carried away by the pessimism. “The chart structure remains positive as long as the 8,850 level is not broken on a closing basis,” he said.
