Tech View: Nifty50 forms a Shooting Star pattern, signals weakness ahead

NEW DELHI: Nifty50 on Thursday plunged over 1 per cent and slipped below its immediate support at 12,800 level. The index formed a 'Shooting Star' candle on the daily chart. Analysts said the index was facing tough resistance in the 12,900-950 range and the formation of this candle after a couple of Hanging Man patterns suggests weakness ahead. The 12,600 level looks likely, they said. On the upside, Nifty50 has a hurdle at 12,900 level, they said..

“The bears finally stepped in after staying away for weeks. The RSI had reached the overbought territory with multiple negative divergences on various time frames, which was signalling a temporary pause in the uptrend. On the daily scale, a Shooting Star candlestick pattern in an uptrend, after a series of Hanging Man candlesticks, indicates a weakening uptrend. A trade below 12,750 level can extend the profit booking to the 12,600-12,450 range," said Aditya Agarwala, Senior Technical Analyst at YES Securities.

For the day, the index closed at 12,771, down 166 points or 1.29 per cent. It also closed below its five-day simple moving average confirming weakness in the ongoing strong uptrend, said Mazhar Mohammad of Chartviewindia.in.


"If the index settles below 12,800 level in the next session, it may kick in the much-needed corrective downswing with initial targets of 12,600 level," he said.

Independent analyst Manish Shah said the index has broken below a minor Double Top pattern on the intraday charts. "A steady drift down towards 12,670-12,690 zone for a couple of days seems likely," he said.

Check out the candlestick formations in the latest trading sessions

“The support for Nifty50 is placed in the 12,670-12,690 range. A break above 12,850 level should again be a signal to go long. Avoid selling Nifty50. A buy-on-declines on the first sign of reversal should be the preferred strategy,” Shah said.