Tech view: Nifty forms Shooting Star pattern, has hurdle at 10,500
, ETMarkets.com|
Updated: Nov 06, 2017, 04.50 PM IST
NEW DELHI: Lack of confidence among investors weighed in on the domestic market in Monday’s trade, as the Nifty50 closed in the red despite rebounding smartly from the day's low.
In the process, the index formed a 'Shooting Star' pattern on the technical chart, as it continued to make higher highs and higher lows. Analysts see multiple confluences in the 10,500-10,600 range, which the Nifty50 could find difficult to breach.
The index end the session at 10,451, down 0.70 points or 0.01 per cent, after finding support at around its five-day exponential moving average (EMA). In a Shooting Star formation, the upper wick is at least twice the size of the real body. (See chart)
“In the next trading session, if the Nifty50 index slips below the 10,400 level, it can attract more selling pressure,” said Mazhar Mohammad of Chartviewindia.in.
Mohammad said a number of bearish parameters have emerged on lower time frame charts, warranting a correction over the next couple of sessions.
The 5-day EMA stood at 10,420 at Monday's close.
“The price behaviour of last 11 sessions from the lows of 10,124 is looking like a rising wedge, which should have bearish implications, as both trend lines are converging with a progressive rally. A close below 10,375 shall act as a confirmation of the short-term trend reversal. Traders are advised to remain cautious and close short-term trading bets below 10,375,” Mohammad said.
Dr CK Narayan, Founder of Chart Advise, advised traders not to go overbought as the index is hovering around the 10,500 level. “Everybody is a tad nervous about where the index is headed. They are worried that liquation will be quick and swift in case some bad news hits the market. That does not mean that we should not participate. Keep participating and have a reasonably distant stop loss.”
Any sluggishness in the momentum will be an opportunity for the bears, trapped or not, to enter and change the market momentum, said Mustafa Nadeem, CEO at Epic Research.
“The broader range for the market remains intact on the lower side at 10,300, where we have seen base formation for the short term. We see upside resistance in the area between 10,550 and 10,600,” said Nadeem.
In the process, the index formed a 'Shooting Star' pattern on the technical chart, as it continued to make higher highs and higher lows. Analysts see multiple confluences in the 10,500-10,600 range, which the Nifty50 could find difficult to breach.
The index end the session at 10,451, down 0.70 points or 0.01 per cent, after finding support at around its five-day exponential moving average (EMA). In a Shooting Star formation, the upper wick is at least twice the size of the real body. (See chart)
“In the next trading session, if the Nifty50 index slips below the 10,400 level, it can attract more selling pressure,” said Mazhar Mohammad of Chartviewindia.in.
Mohammad said a number of bearish parameters have emerged on lower time frame charts, warranting a correction over the next couple of sessions.
The 5-day EMA stood at 10,420 at Monday's close.
“The price behaviour of last 11 sessions from the lows of 10,124 is looking like a rising wedge, which should have bearish implications, as both trend lines are converging with a progressive rally. A close below 10,375 shall act as a confirmation of the short-term trend reversal. Traders are advised to remain cautious and close short-term trading bets below 10,375,” Mohammad said.
Dr CK Narayan, Founder of Chart Advise, advised traders not to go overbought as the index is hovering around the 10,500 level. “Everybody is a tad nervous about where the index is headed. They are worried that liquation will be quick and swift in case some bad news hits the market. That does not mean that we should not participate. Keep participating and have a reasonably distant stop loss.”
Any sluggishness in the momentum will be an opportunity for the bears, trapped or not, to enter and change the market momentum, said Mustafa Nadeem, CEO at Epic Research.
“The broader range for the market remains intact on the lower side at 10,300, where we have seen base formation for the short term. We see upside resistance in the area between 10,550 and 10,600,” said Nadeem.
