Tech view: Nifty50 forms Hammer pattern, has more downside risks
, ETMarkets.com|
Updated: Nov 09, 2017, 05.34 PM IST
NEW DELHI: Thursday was the third consecutive session when the Nifty50's opening level proved to be the highest point of the day, and the index formed lower highs and lower lows.
The index struggled to eventually secure a flat closing, forming a bearish candlestick pattern similar to a 'Hammer' on the daily chart. The immediate resistance for the index is seen around the 10,380 level, while it may find support in the 10,240-50 range.
Some of the technical charts, including the MACD, have already generated sell signal, but an intraday recovery occurred on Thursday at the index’s 62 per cent retracement from its last leg of rally from the low of 10,123.
Mazhar Mohammad of Chartviewindia.in believes the index may attempt to initially move up towards the 10,384 level, and thereafter towards 10,445.
"As of now, no momentum oscillator has generated a buy signal on the lower time frame charts. Hence, sustainability of this pullback will remain doubtful till some of the momentum oscillators generate a buy signal. Traders are advised to remain cautious and maintain a stop loss at 10,260. The breach of this level can extend the downside,” Mohammad said.
At close, the index stood at 10,308, up 5.80 points or 0.06 per cent. During the session, the index briefly breached its 20-day exponential moving average (EMA) at 10,280 and then took support at it.
The index has broken its rising channel by connecting the swing lows of 9,687, 10,124 and 10,413.
It formed a bearish candle and has been making lower highs and lower lows from last three sessions. If it negates this formation, short-term negativity may take a pause. If it sustains below 10,300, weakness can be seen towards 10,250 and then 10,178 levels, while on the upside, hurdles are seen at 10,380 and 10,450 levels.
The index struggled to eventually secure a flat closing, forming a bearish candlestick pattern similar to a 'Hammer' on the daily chart. The immediate resistance for the index is seen around the 10,380 level, while it may find support in the 10,240-50 range.
Some of the technical charts, including the MACD, have already generated sell signal, but an intraday recovery occurred on Thursday at the index’s 62 per cent retracement from its last leg of rally from the low of 10,123.
Mazhar Mohammad of Chartviewindia.in believes the index may attempt to initially move up towards the 10,384 level, and thereafter towards 10,445.
"As of now, no momentum oscillator has generated a buy signal on the lower time frame charts. Hence, sustainability of this pullback will remain doubtful till some of the momentum oscillators generate a buy signal. Traders are advised to remain cautious and maintain a stop loss at 10,260. The breach of this level can extend the downside,” Mohammad said.
At close, the index stood at 10,308, up 5.80 points or 0.06 per cent. During the session, the index briefly breached its 20-day exponential moving average (EMA) at 10,280 and then took support at it.
The index has broken its rising channel by connecting the swing lows of 9,687, 10,124 and 10,413.
It formed a bearish candle and has been making lower highs and lower lows from last three sessions. If it negates this formation, short-term negativity may take a pause. If it sustains below 10,300, weakness can be seen towards 10,250 and then 10,178 levels, while on the upside, hurdles are seen at 10,380 and 10,450 levels.
