Tech View: Bears thirsty for blood as Dalal Street gets Budget jitters

NEW DELHI: Nifty50 on Monday fell below its five-day, 13- and 20-day simple moving averages, which resulted in a ‘Three Black Crows’ formation on the daily chart. The index also formed lower highs and lows for the second straight session. Support levels also shifted lower, with analysts suggesting a weak momentum ahead.

Aditya Agarwala of YES Securities said the “Three Black Crows” is a bearish candlestick pattern, and noted that the index has shut shop below the 20-DMA support line at 14,300, which was acting as the stop loss line since November 2, 2020.

“A sustained trade below 14,200 level will extend the decline to 14,080-13,900 levels. Though technical Indicator RSI on the shorter time frame has reached the oversold territory, price actions remain weak. Only a trade beyond the 14,450-14,500 zone will trigger short-covering rallies,” Agarwala said.

For the day, Nifty closed at 14,238, down 133 points, or 0.93 per cent.

Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan, believes the 38.2 per cent retracement of the December-January rise i.e. 14,130 will now be the key support to watch out for.

Mazhar Mohammad of Chartviewindia.in said Nifty slipped below the recent low of 14,222 “which was essential to complete one corrective structure, in the form of a FLAT, at a lower degree in Elliot Wave parlance.”

Check out the candlestick formations in the latest trading sessions

He said the index needs to sustain above 14,218 level for any consolidation. Strength on Nifty should not be expected until it closes above 14,650 level, Mohammad said.

Independent analyst Manish Shah said several different types of support are converging around the 14,300-14,230 zone.

“The swing low has been breached marginally and pre-Budget blues have started to shake up the complacent bulls and the overenthusiastic bears are now thirsty for blood,” he said.