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Tech View: Bearish Engulfing pattern on Nifty chart signals more weakness

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NEW DELHI: The Nifty50 could not breach the crucial 10,650 level in intraday trade on Thursday and ended up forming a lower high, lower low pattern on the daily chart for the third consecutive session, which suggests supports have shifted lower.

On the weekly chart, the index formed a Bearish Engulfing pattern, which does not augur well for the index.

A weak trend in Bank Nifty may just supplement the ongoing bearish trend.

“The key measures are mixed on the daily as well as weekly timeframe charts.

The index could extend its correction on a near-term basis,” said Arun Kumar, Market Strategist at Reliance Securities. On Thursday, it could not even touch the crucial 10,650 level in intraday trade.

This was also a trend line level that connects the recent swing lows of 10,020, 10,105, 10,440 and 10,650 levels.

Also, it traded below its 50-DEMA. “As long as the index remains below 10,650, it will stay rangebound with its upside capped.

On the downside, the next major support exists at 10,450,” said Chandan Taparia of Motilal Oswal Securities.

For the day, the index fell 73.30 points, or 0.69 per cent, to 10,526. On the weekly timeframe chart, the index formed a Bearish Engulfing pattern, indicating a likely extension of the ongoing weakness next week. “An important support to be watched next week is at 10,315 level, which is the 50 per cent support area of the previous long bull candle,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities. Mazhar Mohammad of Chartviewindia.in said Bank Nifty, which was resilient till Wednesday, appears to have crumbled, as it generated a classic sell signal on the lower timeframe chart. The trend should aid the bears in tightening their grip on the market, the expert said.




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