Tech view: Nifty forms Long Black Day; bears find favour
, ETMarkets.com|
Updated: Nov 07, 2017, 05.18 PM IST
NEW DELHI: The Nifty50 saw sustained selling throughout the session on Tuesday and ended at the day's low. In the process, it formed a 'Long Black Day' on the daily chart.
The index violated the trend of forming higher highs and higher lows and at shut shop close to its 13-day exponential moving average (EMA) at around 10,334.
Analysts said the short-term indicators are turning in favour of the bears. If the index fails to restrict the fall, a steep drop towards the 20-day moving average of 10,274 is likely.
“The Nifty50 registered Long Black Day on the candlestick chart, as it erased gains of last four sessions and filled the gap zone between 10,383 and 10,367 levels, registered on November 1. Usually such a gap is expected to offer support on the downside. But a failure to do so may be an indication of strengthening downward momentum in the near term," said Mazhar Mohammad, Chief Strategist at Chartviewindia.in.
The index closed below its five-day and 10-day EMAs. Analysts noted that the index was finding support at its nine-day EMA since it hit the low point at 9,687. But the index fell below this level to settle at 10,350.15, down 101.65 points, or 0.97 per cent.
The index also broke its rising channel by connecting the swing lows of 9,687, 1,0124 and 10,413 on the daily chart, said Chandan Taparia, Motilal Oswal Securities.
"If it sustains below the 10,400 mark, weakness could be seen towards the next support at 10,270, while on the upside a hurdle is seen at the 10,450 level,” Taparia said.
Meanwhile, the index also formed a bearish engulfing pattern on the daily chart, which usually occurs as a reversal pattern.
Mustafa Nadeem, CEO, Epic Research, said in the short term the Nifty50 will have support around 10,280 and 10,260 levels, which is its 20-day moving average.
"As our twin momentum oscillators generated a sell signal in Monday’s session, we expect this correction to continue for a couple of sessions and initially head towards the 10,100 mark. Follow through selloff in the next session shall confirm a short-term top at 10,490 level," Mohammad said.
The index violated the trend of forming higher highs and higher lows and at shut shop close to its 13-day exponential moving average (EMA) at around 10,334.
Analysts said the short-term indicators are turning in favour of the bears. If the index fails to restrict the fall, a steep drop towards the 20-day moving average of 10,274 is likely.
“The Nifty50 registered Long Black Day on the candlestick chart, as it erased gains of last four sessions and filled the gap zone between 10,383 and 10,367 levels, registered on November 1. Usually such a gap is expected to offer support on the downside. But a failure to do so may be an indication of strengthening downward momentum in the near term," said Mazhar Mohammad, Chief Strategist at Chartviewindia.in.
The index closed below its five-day and 10-day EMAs. Analysts noted that the index was finding support at its nine-day EMA since it hit the low point at 9,687. But the index fell below this level to settle at 10,350.15, down 101.65 points, or 0.97 per cent.
The index also broke its rising channel by connecting the swing lows of 9,687, 1,0124 and 10,413 on the daily chart, said Chandan Taparia, Motilal Oswal Securities.
"If it sustains below the 10,400 mark, weakness could be seen towards the next support at 10,270, while on the upside a hurdle is seen at the 10,450 level,” Taparia said.
Meanwhile, the index also formed a bearish engulfing pattern on the daily chart, which usually occurs as a reversal pattern.
Mustafa Nadeem, CEO, Epic Research, said in the short term the Nifty50 will have support around 10,280 and 10,260 levels, which is its 20-day moving average.
"As our twin momentum oscillators generated a sell signal in Monday’s session, we expect this correction to continue for a couple of sessions and initially head towards the 10,100 mark. Follow through selloff in the next session shall confirm a short-term top at 10,490 level," Mohammad said.
