Tech View: Nifty sends sell signal on MACD; 15,600 level on the cards

NEW DELHI: Nifty50 snapped a four-day winning streak on Wednesday and formed a bearish candle on the daily scale after forming three indecisive candles. Analysts said the chances of the index revisiting the 15,600 level – the lower end of the ongoing consolidation range – are good. The 15,700 level may offer some support, they said.

The index has sent out a ‘sell’ signal on the MACD indicator, said independent analyst Manish Shah.

“A minor trendline from May’s low has also been violated, which suggests Nifty50 is getting ready for a drop to 15,600-15,650 levels over the next couple of days. We expect the index to stay below 15,800 level at the weekly expiry on Thursday,” Shah said.

For the day, Nifty closed at 15,767, down 101 points or 0.64 per cent.

“A failure to defend Wednesday’s low of 15,742 may drag Nifty50 towards 15,600, which appears to be the lower end of the consolidation range. Contrary to this, as the market is sloshed with liquidity and awaiting the US Fed’s policy outcome, defending the 15,742 level may push the index towards 16,000 levels,” said Mazhar Mohammad of Chartviewindia.in.
This analyst advised traders to avoid long-side bets.

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Gaurav Ratnaparkhi of Sharekhan said Nifty had reached the upper end of a rising channel on the hourly scale from where selling emerged.

In terms of the Fibonacci retracement, Nifty50 has retraced 50 per cent of the recent rise from 15,606 to 15,901.

“Going ahead, the 61.8 per cent retracement mark i.e. 15,720 and lower end of the rising channel i.e. 15,700 will be a support zone to watch out for. The bulls are expected to initiate a fresh round of buying near the 15,720-15,700 zone. The initial short-term target on the upside continues to be at 16,000,” he said.