Tech view: Nifty50 forms ‘Doji Cross’ on weekly charts, suggests exhaustion

NEW DELHI: Friday was a day of lacklustre trading when the Nifty50 moved in a narrow 50-point range, reflecting indecisiveness among traders ahead of the release of factory output data scheduled for later in the day and the first phase of voting in the assembly election in Uttar Pradesh, India’s largest state by population.

This was the second straight session when the index fell after breaching the 8,820 mark in intraday trade. The bulls had lost conviction around this level on Monday’s session as well and, hence, it is likely to pose resistance in the immediate short term, before the index looks to reclaim levels close to the 8,890 mark on spot basis.

On the downside, the index may find support at the 8,765 level, and after that 8,715 and 8,675 levels.

The 50-pack index opened on a positive note, but lost ground in the afternoon session. Late buying eventually helped the index close 15.15 points, or 0.17 per cent, higher at 8,793.

With this, the index signed off the week with a pattern similar to the ‘Doji Cross’ on the weekly charts, suggesting exhaustion of the ongoing momentum.
“We recommend booking profits and shifting focus towards fresh breakouts in individual stocks to create long positions. On corrections, the initial targets can be close to 8,675, whereas a close below this level may kick in a fresh short-term downtrend,” said Mazhar Mohammad, Chief Strategist for Technical Research & Trading Advisory at Chartviewindia.in.

A 'Doji' is formed when the index opens and closes around the same level but remains volatile throughout the day, which is indicated by its long shadow on either side. It appears like a cross or plus sign.

A formation of a Doji ahead of a key event such as the UP elections and IIP data suggests caution.

“On the weekly chart, the Nifty formed a Doji pattern. Having a Doji pattern after 3-4 weeks of straight rally would probably invite some bit of circumspect. The indices still have room on the upside. But on Monday, or maybe over the next two days, if the index does not break above the 8,825 mark, there could be a chance that it might slip towards the 8,700 level,” Kunal Bothra, Independent Market Analyst told ETNow.