Tech View: ‘Hanging Man’ pattern on tech charts shows Nifty momentum is slowing
With a couple of indicators in the overbought territory, Nifty is prone to profit taking.
NEW DELHI: Nifty50 climbed for the third straight session on Wednesday and formed a candle similar to the ‘Hanging Man’ pattern on the daily chart, suggesting a halt in the ongoing momentum, even as intraday selling got bought into.
With a couple of indicators already in the overbought territory, the index is prone to profit taking. The ‘Hanging Man’ pattern appears around the short-term turning points and suggests exhaustion of the ongoing upmove, said Mazhar Mohammad of Chartviewindia.
“On Thursday, if Nifty50 slips below 11,276, it can come under selling pressure in intraday trade. If the downswing materialises, the targets can be placed in the 11,227-11,180 zone. Traders may book profit if risk-reward turns unfavourable,” Mohammad said.
For the day, the index closed 40.50 points, or 0.36 per cent, higher at 11,341.
Following this sharp upward move, the RSI reached extreme overbought territory on the shorter time frame chart. It has formed a negative divergence, which indicates that the rally is reaching maturity, said Aditya Agarwala, Senior Manager, Technical Analysis at YES Securities.
Besides, the index is not too far from the 78.6 per cent retracement of the September–October decline, which stands near the 11,400 mark.
“The key Fibonacci level is likely to trigger profit booking in the benchmark. On the downside, the recent gap area between 11,227 and 11,180 levels shall now act as a crucial support,” said Gaurav Ratnaparkhi of Sharekhan.
With a couple of indicators already in the overbought territory, the index is prone to profit taking. The ‘Hanging Man’ pattern appears around the short-term turning points and suggests exhaustion of the ongoing upmove, said Mazhar Mohammad of Chartviewindia.
“On Thursday, if Nifty50 slips below 11,276, it can come under selling pressure in intraday trade. If the downswing materialises, the targets can be placed in the 11,227-11,180 zone. Traders may book profit if risk-reward turns unfavourable,” Mohammad said.
For the day, the index closed 40.50 points, or 0.36 per cent, higher at 11,341.
Following this sharp upward move, the RSI reached extreme overbought territory on the shorter time frame chart. It has formed a negative divergence, which indicates that the rally is reaching maturity, said Aditya Agarwala, Senior Manager, Technical Analysis at YES Securities.
Besides, the index is not too far from the 78.6 per cent retracement of the September–October decline, which stands near the 11,400 mark.
“The key Fibonacci level is likely to trigger profit booking in the benchmark. On the downside, the recent gap area between 11,227 and 11,180 levels shall now act as a crucial support,” said Gaurav Ratnaparkhi of Sharekhan.
