Tech View: Nifty50 forms indecisive 'Doji' pattern; experts suggest treading with caution
NEW DELHI: The Nifty50 traded in a narrow 40-point range on Monday and formed ‘Doji’ pattern on the daily chart, suggesting indecisiveness among market participants.
A 'Doji' candlestick pattern, which can be formed both at the top and bottom of the market, signifies that the current trend might be losing strength.
On Monday, the Nifty50 formed a red real body for the third session in a row. The real body was narrow, suggesting it closed around the opening level.
The 50-pack index opened at 9,144.75 and soon hit its day’s low of 9,120.25. Later, the index saw some buying as it rose to its day’s high of 9,160, before closing the day at 9,139.30, down 11.50 points, or 0.13 per cent.
“The occurrence of Doji after the recent profit booking indicates that follow up selling is missing and decline is being bought into. Now it has to cross and hold above 9,165 to witness an upmove towards 9,218 and 9,250. The downside supports are seen at 9,090 and 9,050 levels,” said Chandan Taparia, derivative & technical analyst at Motilal Oswal Securities.
Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in said that this indecisive formation does not suggest any meaningful bottoming out process, even as the selling was arrested for the day.
“But it can raise hopes of bottoming out process, if any follow through buying pushes the indices beyond 9,202 levels on a closing basis,” Mohammad said.
“On the other hand, any sell off below 9,120 levels shall see the indices heading towards its critical support levels placed around 9,000. Hence, we recommend traders to wait for confirmation of strength rather than jumping onto the bogey and create long positions in haste,” he said.
Kunal Bothra, Independent Market Analyst believes that the Nifty50 is consolidating in a range and which could shift slightly lower towards 9,150.
The level could act as a strong support, Bothra said.
A 'Doji' candlestick pattern, which can be formed both at the top and bottom of the market, signifies that the current trend might be losing strength.
On Monday, the Nifty50 formed a red real body for the third session in a row. The real body was narrow, suggesting it closed around the opening level.
The 50-pack index opened at 9,144.75 and soon hit its day’s low of 9,120.25. Later, the index saw some buying as it rose to its day’s high of 9,160, before closing the day at 9,139.30, down 11.50 points, or 0.13 per cent.
“The occurrence of Doji after the recent profit booking indicates that follow up selling is missing and decline is being bought into. Now it has to cross and hold above 9,165 to witness an upmove towards 9,218 and 9,250. The downside supports are seen at 9,090 and 9,050 levels,” said Chandan Taparia, derivative & technical analyst at Motilal Oswal Securities.
Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in said that this indecisive formation does not suggest any meaningful bottoming out process, even as the selling was arrested for the day.
“But it can raise hopes of bottoming out process, if any follow through buying pushes the indices beyond 9,202 levels on a closing basis,” Mohammad said.
“On the other hand, any sell off below 9,120 levels shall see the indices heading towards its critical support levels placed around 9,000. Hence, we recommend traders to wait for confirmation of strength rather than jumping onto the bogey and create long positions in haste,” he said.
Kunal Bothra, Independent Market Analyst believes that the Nifty50 is consolidating in a range and which could shift slightly lower towards 9,150.
The level could act as a strong support, Bothra said.
