Nifty Analysis: Tech View: Nifty forms bearish candle, shows signs of weakness

NEW DELHI: Nifty50 formed a bearish candle on the daily scale on Thursday, a day after making a Shooting Star-like reversal pattern. This was the second day the index formed lower highs and lows. Analysts said Nifty recently saw a breakout from its consolidation band, but in absence of followup buying, it may go back to a broad trading range.

They also noted that the NSE barometer failed to hold on to its immediate support, which was disappointing. The index needs to hold above 14,880-860 zone to resume the uptrend, they said.

“Nifty has faced immediate resistance at the upper band of the Bollinger formation which suggests a bearish move in the near term. Besides, Nifty has confirmed a breakdown of the Shooting Star pattern, also a sign of correction. Adding to that, the Stochastic oscillator showed a negative crossover on the daily chart, indicating some correction for the coming sessions,” said Choice Broking.

For the day, Nifty closed at 14,906, down 124 points or 0.83 per cent.

Nifty50 appears to have whipsawed its recent breakout registered on May 18, as it gave up all the gains with a close below the bullish gap present in the 15,043-14,938 zone. That range was supposed ideally to act as a support, but failed to do so, said Mazhar Mohammad of Chartviewindia.in.
“On Friday, if Nifty trades below 14,884 level, it should eventually head to its initial targets placed around 14,600 level,” Mohammad said.

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Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan, said the minor degree dip that started near the 78.6 per cent retracement of the February-April decline continued on the downside.

“With this, Nifty50 has filled the recent gap in the 15,043-14,938 zone. Additionally, the index has retested the falling trendline, which it had surpassed on its way up. The selling pressure got absorbed near this trendline and Nifty is expected to see the next leg-up from here on. The overall outlook continues to be positive with the initial short-term target at the 78.6 per cent retracement i.e. 15,160. On the downside, the immediate support exists in the 14,860-14,800 zone,” Ratnaparkhi said.