​Tech view: Nifty50 forms long-legged Doji, bears tighten grip on D-Street

NEW DELHI: The Nifty50 ended the volatile day in the red on Friday, making a long-legged Doji pattern on the daily candlestick charts and a hanging man-like pattern on the weekly charts.

Usually a long-legged Doji pattern is formed when the market sees huge swings on either sides but closes almost around its opening level. The Nifty50 opened at 7,718.05 and closed at 7,713.05on Friday.

The Nifty50 dropped 72 points from its previous close of 7,738.40, thus making a long shadow on the lower side. The index has been struggling between the broader trading range of 7,580 to 7,777 levels.

“The Nifty50 made a long-legged Doji pattern on the daily charts, whereas on the weekly charts, we saw a hanging man-like pattern by the end of Friday’s session,” Mazhar Mohammad, Chief Strategist - Technical Research & Trading Advisory, Chartviewindia.in, told ETMarkets.com.

“When we read the charts of different time frames in isolation, we are forced to conclude that the bears are tightening their grip on the market. Hence, we advise caution for short-term traders and expect a listless trading session on Monday,” he said.

It was a perfect indecisive week for the traders. This can be concluded from the fact that after forming any candlestick pattern, there was no follow-through on either side, which suggests that the traders lack conviction.

The market awaits further trigger to break out of the range. In the absence of any global factors, the Reserve Bank of India's (RBI) policy next week is likely to provide a direction to the market, experts said. A 25 bps rate cut is factored in the price, they said.

Mohammad said any disappointment from the RBI policy is likely to strengthen the position of the bears, thereby pushing the market into a short-term corrective and consolidation mode with the initial target of 7,400 level.




The Nifty50 closed in the negative with a loss on 25 points from its previous close to settle the day below the 7,720 mark. But some analysts say the immediate trend on the upside is intact. The fight between the bulls and the bears is likely to continue for some more time.

"The immediate trend may remain intact on the upside. In the last series, Nifty50 rallied by around 11 per cent, but now the concern is that there has been sustained supply and follow-up buying is missing at higher level," Chandan Taparia, Derivatives & Technical Analyst - Equity Research at Anand Rathi Financial Services, told ETMarkets.com.

"The index has to cross and hold above the 7,750-7,777 zone to continue its next upward move towards the 7,850 level and then 7,925 level, while if it fails to hold above 7,660, then it may go down to test its immediate major support at 7,580 level,” he said.

However, if the index fails to hold above 7,580, then the market could form a short-term top, indicating a decline in profit booking.