Nifty50 on Monday fell for the second straight day and formed a bearish candle on the daily chart. This was after the formation of the Bearish Engulfing pattern on Friday. Analysts said the index slipped back below a falling trend line, indicating a failed breakout. They see further weakness ahead.
The long bear candle formed on the daily chart confirmed the false upside breakout of the significant overhead resistance of the down sloping trend line at 17,900 level, said Nagaraj Shetti, Technical Research Analyst at
Securities.
“The long bear candle of the last two sessions signals a faster downside retracement of the last 5-6 sessions of upmove. This is a negative indication and signal that bears are in a driver’s seat,” he said.
For the day, the index closed at 17,490.70, down 267.75 points or 1.51 per cent.
A fall below 17,400 may trigger a further correction in Nifty50, said Rupak De, Senior Technical Analyst at
.
“On the lower end, support is visible at 17,200-17,000. On the other hand, the Nifty50 may recover towards 17,700 if it doesn’t fall below 17,400,” De said.
Gaurav Ratnaparkhi of Sharekhan said Nifty50 formed a Shooting Star candlestick pattern on the weekly chart for the last week. Also, on the daily chart, the index had seen few bearish developments on August 19. “Thus, follow-through action was witnessed today. In the week gone by, the index had crossed a falling trendline; however, it couldn’t sustain in the higher territory and has tumbled below the trendline today. This shows that the bears are having the upper hand currently. The short-term momentum indicators are also in favour of the bears,” Ratnaparkhi said.
This analyst sees a decline in Nifty50 towards 17,300 and 17,000 on the downside. On the other hand, 17,700-17,750 will act as a near-term hurdle zone, he said.
Nifty Bank
Chandan
of
Securities said Nifty Bank formed a Bearish candle on the daily scale and strongly respected the 38,250 level multiple times during the day.
“It has to hold above 38,250 for an upmove towards 38,750 and 38,888 zones whereas supports are placed at 38,000 and 37,750 zones,” he said.
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