Tech view: Nifty50 forms Bearish Belt Hold pattern, may slip further

NEW DELHI: The Nifty50 on Monday closed at its lowest level in 10 sessions. In the process, the index made a real body with no upper wick, giving rise to a candle formation similar to the ‘Bearish Belt Hold’ pattern on the daily chart.

This, along with the fact that the MACD has now breached the signal line, suggests that a pronounced weakness in the index cannot be ruled out, said analysts.

A ‘Bearish Belt Hold’ pattern is formed when the opening price becomes the highest point of the trading session (intraday high), leaving no upper shadow, and then the stock declines through the day, forming a large body and a small lower shadow.

“This indicates that the bears are dominating at higher levels and are not letting the bulls go past the current zone. The short-term trend of downward move may remain intact,” said Mustafa Nadeem, CEO at Epic Research.

On Monday, the index opened at 9,646 and could not even hit the 9,650 level, reflecting the high resistance it faced around this mark. The index dropped below the 9,600 mark, which was the first in nine sessions. It eventually closed the day at 9,616, down 0.54 per cent.

With the index making lower highs and lower lows from last two sessions, if it holds below 9,620, it may get dragged towards 9,580 and 9,550 levels. “On the upside, hurdles are seen at 9,680-9,700 levels to start the next upward move,” Taparia said.

Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in said Monday’s price action acted as confirmation of the negative chart pattern witnessed on the weekly time frame charts.

“If the Nifty50 does not recover in the immediate term, the initial target on the downside can be around the 9,500 level. A close below the same level shall confirm a short-term top around the 9,700 level, thereby ushering in a multi-week correction. For the time being, the upside shall remain capped around the 9,700 mark till a fresh breakout happen above this level,” Mohammad said.