Tech View: Nifty forms bearish candle as bulls fail to make a comeback

NEW DELHI: The bears are back to flex their muscles. The Nifty on Thursday made a small bearish candle similar to indecisive 'Doji' on the daily chart.

Such a pattern at a swing low of 10,079.30 level, a second such formation in the last three sessions, and a close above 10,100 level made some analysts believe that the index is attempting to form a bottom around the prevailing levels.

“The underlying short-term trend for the Nifty is down, but the market is making an attempt to form a bottom reversal at 10,100 level. As long as the low of 10,100-10,050 holds, there is a possibility of upside bounce in the market,” said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.


The daily lower Bollinger Band continues to make room for the index on the downside, said Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.

The selling pressure is likely to aggravate once the index breaks the key support range of 10,000-9,952, he said.

According to Chandan Taparia of Motilal Oswal Securities, the index has been trading at deep oversold territory, but the bounces are being sold into.

The trend is still intact to negative. Till the index stays below 10,200, weakness will continue towards next major support of 10,000 level, he added.

Mazhar Mohammad of Chartviewindia.in said some of the momentum oscillators have started displaying positive divergence and the twin momentum oscillators are in buy mode, which usually acts as a leading indicator before the market turns.

“We will advise traders to bet on a pullback rally for an initial target of 10,400 level, with a stop placed below 10,100 level on a closing basis,” he said.