Tech View: Nifty50 forms a bearish candle again, may accelerate decline

NEW DELHI: The Nifty50 lost momentum midway through the session on Wednesday and closed below the psychological mark of 9,350 ahead of the expiry of May series futures and options contracts. The index made a lower low for the third straight session and formed a bearish candle on the daily chart.

The 50-pack index has thus fallen below its 13-day and 20-day exponential moving averages (EMAs).

Analysts are advising traders not to take on aggressive longs.

“In the immediate session, if the Nifty50 fails to sustain above the 9,341 level and trades below the said level consistently for at least an hour, then shorting opportunity shall arise with an initial target of 9,272. Traders may look for signs of stability around its support level, and a breach of this level on a closing basis shall further accelerate the downward momentum,” said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in.

The index opened higher and soon breached the 9,400 level. It fell into the negative terrain before the bulls took charge and pulled the index back into the green. However, the work done went in vein as weak trend across the board hurt market sentiment. The index eventually settled the day at 9,360, down 25.60 points, or 0.27 per cent.

Mohammad said if the index manages to sustain above the 9,400 level on a closing basis, traders can look forward to a timewise correction without much price damage.

Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Financial Services, said the Nifty50 has broken its rising weekly support trend line by connecting the lows of 7,893 and 9,130 levels.

“If it holds below 9,380, a decisive breach of the trend line could put more pressure on the bulls,” Taparia said.

Mustafa Nadeem, CEO, Epic Research, sees crucial support for the Nifty50 at 9,300 and 9,250 levels, while other experts see resistances at 9,450 and 9,500 levels.