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Tech View: Nifty trend turns negative; consider sell on rise



Tech View: Nifty trend turns negative; consider sell on rise

NEW DELHI: Nifty50 on Monday plummeted over 500 points and tested the lower end of the support zone in the 14,250-14,300 range, before closing just above it. The index formed a Long Black Day candle on the daily chart in a followup to the weakness seen on the weekly chart last week. Analysts said support and resistance levels for the index have also fallen and that a breach below 14,200 level can trigger a strong correction on the index.

For the day, Nifty not only breached the recent corrective swing low of 14,264 level, but also tested its 100-day simple moving average, whose value is placed around 14,250 level. The index eventually closed at 14,310, down 524.05 points or 3.53 per cent.

“The index can make an attempt to bounce back as long as it sustains above 14,248 level . But, considering the magnitude and pace of fall, any bounce shall remain vulnerable to selloff. Upsides will be capped around 14,652 level, and any strength would not be expected unless the said hurdle is cleared on a closing basis,” said Mazhar Mohammad of

Check out the candlestick formations in the latest trading sessions

Fibonacci retracement showed the index went down to hit the 61.8 per cent retracement of the February rise, said Gaurav Ratnaparkhi of Sharekhan.

“Nifty has approached a trendline drawn from the previous crucial swing lows. All these parameters offered some support to the index. These parameters are in the 14,200-14,300 range. Unless this range is broken on a closing basis, the index can still stay in a consolidation phase. The new short-term range for the index will be in the 14,200-14,700 range,” Ratnaparkhi said.

Independent Analyst Manish Shah said a distinct pattern of lower highs and lower lows has been observed. “The slope of the moving average has turned negative and this indicates that the market is turning lower. Nifty’s volatility squeeze seen in the last two days seems to be resolving on the downside. With this, the trajectory has turned down and Nifty50 is likely to see a decline to a pre-Budget low of 13,500-13,400 levels. Any short-term rally should be used as an opportunity to sell,” he said.

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