Tech view: Nifty50 forms a bearish candle, may decline till 10,100 level

NEW DELHI: The Nifty50 on Monday suffered a one per cent cut and formed a solid bearish candle on the daily chart. It continued to form lower highs and lower lows for the fifth consecutive session, dragging the supports lower.

The index has now fallen below its 20-day exponential moving average (EMA), raising the possibility of further downside towards 10,100, said analysts.

The index failed to hold at its 10260 level, the support zone of last three sessions, and closed below the same, said Rajesh Palviya, Head of Technical & Derivatives Analysis at Axis Securities.

"The bearish sentiment was reconfirmed after Nifty closed below its 20-day SMA at 10,307. If Nifty50 sustains below 10,200, it can drift towards 10,120 and 10,100 levels. On the weekly chart, the RSI has formed a negative divergence. Further weakness can't be ruled out in the near term,” Palviya said.

The 50-share index settled the day at 10,224, down 96.80 points, or 0.94 per cent. The ‘RSI-Smoothened’ has maintained a negative posture by sneaking well below the threshold of 70.

“Going ahead, the ‘200 SMA’ at 10,206 on the hourly chart would be considered the immediate support. In case of a minor bounceback from this support, selling may escalate. In that case, the next support would be seen at 10,182 and 10,123 levels, while on the flipside, the 10,266 and 10,345 levels would act as a sturdy wall. Traders are advised to stay light on positions and avoid taking undue risks,” said Sameet Chavan of Angel Broking.

Mazhar Mohammad of Chartviewindia.in believes it would prudent for traders to wait for Nifty to rise above 10,350 level instead of buying the dip in haste, as he believes the Nifty50 should ideally go down all the way to 10,100 level, if the ongoing weakness persists.

“The Nifty50 formed a solid bear candle after positive consolidation for two days, which dashed the hope of a pullback rally. It is looking more like a resumption of downswing after breakdown of the consolidation on the lower time frame charts. Traders should not be in a hurry to go for long positions as Nifty breaks one after another support level,” he said.