Tech view: Nifty50 forms Bearish Belt Hold, slips below its 20-DMA

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For aggressive trades, a drop towards 11,390 could be a shorting opportunity, experts said.

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NEW DELHI: The Nifty50 formed a Bearish Belt Hold candle on the daily scale on Monday and reversed the higher high formation seen in the previous two sessions.

The index decisively fell below its 20-day moving average, as the bulls lost steam and would now need to sustain above the 11,400 level to keep any major selling pressure at bay.

For aggressive trades, a drop towards 11,390 level could be a shorting opportunity, experts said.

For the day, the index fell 151 points, or 1.30 per cent, to 11,438. Its 20-day moving average now stands near 11,550, which would pose a strong resistance for the index.

The Bearish Belt Hold candle indicated that the bears are holding a grip, even as the index formed multiple Hammer patterns in last three sessions, said Chandan Taparia of Motilal Oswal Securities.

Should the index hold below 11,500 level, it would witness selling towards the recent swing low of 11,400. It may face resistance around the 11,550 mark, Taparia said.

Rajesh Palviya of Axis Securities said a decisive close below its 20-day SMA could signal a short-term change of trend.

From its current level, the 11,400 level remains a crucial support for Nifty. Any violation of this level will trigger further downside towards 11,350 and 11,320 levels. On the upside, the 11,500 level will remain a key resistance. Daily strength indicator RSI continued to remain in the negative terrain, which supports the weakening trend,” Palviya said.

Mazhar Mohammad of Chartviewindia.in advised aggressive traders to consider fresh shorts on any breach of the 11,390 level by placing a stop loss above the day’s high.

“We observe a negative sequence of lower tops and bottoms in Nifty as per daily time frame chart. Friday's swing high of 11,603 level could be considered the new lower top of the sequence. The Nifty moving below the recent swing low of 11,393 could lead to the formation of a new lower bottom for the short term,” said Nagaraj Shetti of HDFC Securities.
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