Tech View: Nifty forms 'Bearish Engulfing' candle, index recovery looks vulnerable

NEW DELHI: Nifty50 saw steep selling pressure after hitting a record high on Wednesday, as the index ended up forming a 'Bearish Engulfing' candle on the daily chart. For now, any recovery on the index will be vulnerable to selloffs, said analysts.

The daily momentum indicator has triggered a bearish crossover, said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.

"These are signs of fatigue and suggest that the uptrend could be near its maturity from the short term perspective. On the way down, Nifty has broken its crucial hourly moving averages and the ongoing fall can continue till 12,600," the analyst said.

For the day, the index closed at 12,858.40, down 196.75 points or 1.51 per cent.
Mazhar Mohammad of Chartviewindia.in said the reversal formation from a critical resistance point on long-term charts suggest that a multi-week top has been made around 13,145 level. Any index rally would be vulnerable to a selloff with an initial target of 1,2730 level, he said.

Mohammad said that the index could turn sideways only if it manages to defend the recent low of 12,833 in Thursday's trade.

Check out the candlestick formations in the latest trading sessions

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Chandan Taparia of Motilal Oswal Securities said that the index needs to hold above 12,850-12,900 to make an attempt for 13,000 level. "A hold below the same, could send the index towards 12,800 and 12,750 levels," Taparia said.