Tech view: Nifty50 forms ‘Long Legged Doji’ on weekly chart; 8,820 level key
Based on technical evidence, we suspect this market is making a topping out formation and upsides will be limited, said Mazhar Mohammad of Chartviewindia.in.
By Amit Mudgill, ETMarkets.com | Updated:
NEW DELHI: Nifty50 climbed half a per cent on Friday, but what took away sheen from the index gains was the fact that despite a strong day, the 50-pack index could not close above its opening level, suggesting lack of conviction among bulls at higher levels.
On weekly charts too, the index registered an indecisive formation ‘Long Legged Doji’. This pattern has now been observed for the last two consecutive weeks, which confirms that the market lacks momentum for substantial upmove from current levels, say analysts.
“Based on weight of technical evidence with us, we suspect this market is making a topping out formation and hence we believe that upsides will be limited and traders are strongly recommended to lighten up their long positions by using such rallies, if any,” said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in.
A ‘Long-Legged Doji’ pattern is formed when the opening price is almost equal to the closing price, but there is a lot of movement on both sides. The pattern is neutral and indicates that neither the bulls nor the bears were able to regain control on Dalal Street, which suggests that a shift in trend could be in the offing. However, it does require a confirmation.
Nifty50 shot up to 8,883.70 at opening bell. It took no time for the index to hit the day’s high of 8,896.45. The index lost momentum as the session progressed. At the close, it was up 43.70 points, or 0.50 per cent, at 8,821.70.
Raghu Kumar, Director at Upstox said that Nift50y has now formed a base between 8,700 and 8,730 levels. Kumar expects Nifty50 to touch the 8,900-9,000 levels in the coming days.
On weekly charts too, the index registered an indecisive formation ‘Long Legged Doji’. This pattern has now been observed for the last two consecutive weeks, which confirms that the market lacks momentum for substantial upmove from current levels, say analysts.
“Based on weight of technical evidence with us, we suspect this market is making a topping out formation and hence we believe that upsides will be limited and traders are strongly recommended to lighten up their long positions by using such rallies, if any,” said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in.
A ‘Long-Legged Doji’ pattern is formed when the opening price is almost equal to the closing price, but there is a lot of movement on both sides. The pattern is neutral and indicates that neither the bulls nor the bears were able to regain control on Dalal Street, which suggests that a shift in trend could be in the offing. However, it does require a confirmation.
Nifty50 shot up to 8,883.70 at opening bell. It took no time for the index to hit the day’s high of 8,896.45. The index lost momentum as the session progressed. At the close, it was up 43.70 points, or 0.50 per cent, at 8,821.70.
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“Even after a strong opening, it formed a bearish candle on daily chart as closing was lower than the opening levels. Now it has to hold above 8,820 zones to extent it upmove towards 8,888 then 8,968 levels while on the downside supports are seen at 8,750 and 8,720,” said Chandan Taparia, Associate Vice President at Motilal Oswal Securities.Raghu Kumar, Director at Upstox said that Nift50y has now formed a base between 8,700 and 8,730 levels. Kumar expects Nifty50 to touch the 8,900-9,000 levels in the coming days.
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