Tech view: Nifty50 forms bearish engulfing pattern as bears return

NEW DELHI: The bulls struggled to keep the market afloat through morning trade on Wednesday, but China's announcement of tit-for-tat curbs on US imports ensured the last laugh for the bears.

The Nifty50 formed a Bearish Engulfing pattern on the daily chart, reflecting the mauling of the bulls. The index may now see tough resistance in the 10,170-200 range, while any further weakness may pull down the index towards 10,100 and later 10,000, analysts said.

“The Nifty50 is approaching its short-term support in the 10,100-10,090 zone. Violation of this support zone will cause further weakness and take the index towards the 10,030-10,000 zone. An immediate resistance is seen around the 10,170 level," said Rajesh Palviya, Head – Technical & Derivatives Analyst at Axis Securities.


For the day, the index fell 116 points, or 1.14 per cent, to settle at 10,128. During the day, the index fell below the support at its 20-day SMA at 10,208. Momentum indicator Stochastic has turned bearish from the overbought zone, indicating downside momentum ahead, Palviya said.

“The 10,016 level is a critical to watch out for, as a breach of this mark, based on our technical observations, shall lead to retesting of the 9,950 level. For the time being, upside shall remain capped around 10,279 level," said Mazhar Mohammad, of Chartviewindia.in

A Bearish Engulfing candle on the daily scale implies complete dominance by the bears, says Chandan Taparia of Motilal Oswal Securities, who believes Nifty could see weakness at 10,050 and then 10,000 level unless it holds below 10,180. On the upside, hurdles are seen at 10,222 and 10,276 levels, he said.