The candle had a long wick, suggesting the index recovery after testing the 17,100 level. Analysts said while the trend stays weak, a bounce cannot be ruled out given the index has come near its strong support range of 16,800-17,000 levels.
iStock
NEW DELHI: Nifty50 on Monday made a 'Death Cross' as the 50-day simple moving average fell below its 200-day moving average. The last time the index made a 'Death Cross' was in March 2020.
The day saw the index seeing a gap down opening and eventually it closed the day around the same level, thus making an indecisive Doji candle on the daily chart.
The candle had a long wick, suggesting the index recovery after testing the 17,100 level.
While A Death Cross suggests the trend may stay weak, a bounce cannot be ruled out given the index has come near its strong support range of 16,800-17,000 levels.
ETMarkets.com
The 50-day simple moving average on Monday fell below its 200-day moving average/
"A Death Cross signals a bearish trend ahead. But the Nifty50 also made an indecisive Doji as there was no follow up selling after the opening gap down. While the trend stays negative, a bounce cannot be ruled out," said Chandan Taparia of Motilal Oswal Securities.
The index eventually closed the day at 17,173.65, down 302 points or 1.73 per cent. This was the fourth day of straight fall for the index.
Nagaraj Shetti, Technical Research Analyst, HDFC Securities said the previous opening gaps as per weekly chart have been filled subsequently after opening. "Nifty50 is now placed at the important valuation support of around 17,000-16,800 levels. This area acted as a significant reversal in the past and resulted in substantial moves in Nifty50 on either side. Hence, there is a scope for short term upside bounce," he said.
During the day, said Mazhar Mohammad of Chartviewindia.in, the index not only tested its 200-day SMA but also psychological support present around the 17,000 level.
"Hence, going forward, it remains critical to sustain above 17,000 level. A strength shall not be expected unless it bridges the bearish gap present in the zone of 17,237 and 17,457 levels. Contrary to this, a close below 17,000 shall initially drag it down towards the 16,840 level, where the 200-day Exponential Moving Average is present. Therefore, for the time being, it looks prudent to remain neutral on the index," he said.
iStock
ETMarkets.com