Tech view: No clarity on D-Street! Nifty forms Doji pattern on charts

NEW DELHI: The Nifty50 ended a listless session on a muted note with a negative bias on Friday, forming a Doji kind of pattern on the daily candlestick charts, which suggests lack of clarity. There could be further consolidation before the index makes a decisive move.

A Doji is formed when the index opens and closes approximately 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 a plus sign.

The Nifty50 opened at 7,891.80 and closed virtually at the same level at 7,899.30, thus forming a Doji pattern. It rose to an intraday high of 7,923.35, forming an upper shadow, and fell to an intraday low of 7,873.35, forming a long lower shadow.

A Doji is a neutral chart pattern and, hence, should not be studied in isolation. Traders should take a call depending on how the index behaves in the next few sessions. A narrow trading range resulted in a short candle body, which suggests consolidation ahead of the expiry week.

“A listless trading session on Friday resulted in a Doji formation on the daily charts as the market closed slightly higher than where it opened. Interestingly, the narrow range of trading in last four sessions resulted in a Doji formation on the weekly charts,” Mazhar Mohammad, Chief Strategist - Technical Research & Trading Advisory, Chartviewindia.in told ETMarkets.com.



The Nifty50 ended the week on a muted note. The index rose 0.6 per cent in a truncated week while BSE Sensex closed 0.8 per cent higher.

With this Doji formation and lacklustre trading, bearish sentiment is getting strengthened as it has triggered a sell signal on two of the most successful momentum oscillators, experts said.

“It is looking like a round top on the lower time frame charts, as Nifty50 closed almost at the same point of 7,914 in the three previous sessions. The upside looks capped and a bearish picture may emerge for the short term once Nifty50 closes below the 7,840 level,” Mohammad said.

The market may re-test the gap zone between 7,772 and 7,717 levels registered on April 13, 2016 sometime next week before expiry, experts said.