A long bear candle that almost engulfed the previous bull candle on the downside, resembled Bearish Dark Cloud Cover formation.
NEW DELHI: Nifty50 on Tuesday saw a strong selling pressure near its 200-day moving average, with the index ending up forming a large bearish candle on the daily chart. Analysts believe the index has strong support around the 16,400 level while they see resistance for the index at the 17,000 level.
A long bear candle that almost engulfed the previous bull candle on the downside, resembled Bearish Dark Cloud Cover formation, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities, who added that such a formation after a reasonable upmove often results in a reversal pattern post confirmation.
Shetti said Tuesday’s downside reversal from near the important cluster resistance of 16,800-17,000 levels opens up a possibility of false upside breakout. “Having bounced back sharply from a bottom of 15,671 levels for more than 1,000 Nifty50 points recently, the odds of higher bottom formation is high,” he said.
The index closed the day at 16,663.00, down 208.30 points or 1.23 per cent.
“Technically, the index has cooled off from the recent resistance and could enter into a broad consolidation phase. The immediate supports for Nifty50 are placed around 16,500 and 16,400 while 16,800-16,900 will be seen as resistance,” Ruchit Jain, Lead Research at
Mazhar Mohammad of Chartviewindia.in said critical support seems to be placed in the bullish gap zone of 16,447-418 level, registered on March 10 and the lower end of this range is not broken, the trend may not favour bears.
“Nevertheless, strength should not be expected unless Nifty50 closes above 17,000 level. On such a close, a bigger and sustainable up move can be expected with initial targets present in the zone of 17,450-500 levels,” he said.
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