Tech View: Nifty50 forms Doji on weekly chart, sends out negative signal

Analysts largely see 12,750-13,150 as the range for the index for the coming week. A break above this range can offer directional cues, they said.

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Normally, a formation of Doji after a reasonable up move could be an alert of a possible trend-reversal, which can be confirmed with weakness in the subsequent weeks, said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
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NEW DELHI: Nifty50 on Friday formed a bearish candle on the daily chart and an indecisive Doji on the weekly chart.

The day saw the NSE barometer facing resistance above the psychological mark of 13,000, which has been the case for the past couple of sessions now. Analysts largely see 12,750-13,150 as the range for the index for the coming week. A break above this range can offer directional cues, they said.

Normally, a formation of Doji after a reasonable up move could be an alert of a possible trend-reversal, which can be confirmed with weakness in the subsequent weeks, said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.


The Doji pattern, he said, was formed just above the crucial long-term resistance of the ascending trend line -- uptrend line connected from top to top-weekly/monthly chart. It signalled chances of downward correction below the trend line support of 12,800 levels, Shetti said.

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"Strength in this market is unlikely unless Nifty50 closes above 13,145 level. A close below 12,858 levels can be treated as an initial sign of weakness, whereas a close below 12,790 should resume the downtrend, paving the way for much-needed corrective downswing," said Mazhar Mohammad of Chartviewindia.in.

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Nirali Shah of Samco Securities said that the index is trading in an overbought zone and traders should take a defensive stance and lighten the aggressive bets.

Check out the candlestick formations in the latest trading sessions
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"The immediate support and resistance are now placed at 12,750 and 13,150, respectively. A break below the support may lead to a retest of 12,400, while a break above 13,150 might open targets up to 13,400," Shah said.

Aditya Agarwala, Senior Technical Analyst at YES Securities said that the 14-day RSI has turned down after forming a negative divergence, suggesting a temporary pause in the uptrend may be on the cards.

"A sustained trade above 13,000 will resume the uptrend, taking it higher to levels of 13,075-13,130. However, on the flip side, a move below 12,800 could trigger profit booking, dragging the index lower to levels of 12,700," he said.
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