Tech view: Nifty forms bearish candle; analysts expect selling next week

Nifty50 opened on a negative note at 16,283.95 and slid to as low as 16,172.60 level. However, during the day, buying emerged at some points to take the index to as high as 16,324.70. Eventually, it closed down 276.30 points or 1.68 per cent at 16,201.80.

“A long negative candle was formed on the daily chart and that moved below the support of 16,200 levels. Now, the supports have started to break down one after another and the market seems to have picked up downside momentum on Friday,” said Nagaraj Shetti, Technical Research Analyst,

Securities.



Nifty on the weekly chart formed a negative reversal candle on the downside. Formation of a long bear candle on the weekly chart signals a larger lower top reversal pattern at the swing high of 16,793 levels, said analysts.

“After showing a range bound action with weak bias in the last few sessions, the Nifty seems to have turned into bearish mode on Friday with strong downside momentum. The near-term outlook remains weak and any attempt of upside bounce from here could be short-lived. The Nifty could eventually test the recent important bottom of 15735 levels in the near term,” said Shetti.

The movement in the market was contrary to the expectations of most analysts. Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by

, said on account of the global cues, the Nifty witnessed additional selling pressure in the last session of the week.

“The index has filled up a gap area on the daily chart and has halted near a falling trendline. The overall structure shows that the range for the Nifty has shifted downward for the short term. 16,000-16,400 is expected to be the short-term range in the coming sessions,” he said.

Rupak De, Senior Technical Analyst at

, also said the bias is likely to remain weak as long as the index remains below 16,400. On the lower end, support is pegged at 16,200; a decisive breakdown below 16,200 may induce selling pressure in the market, he added.

Bank Nifty

Bank Nifty also opened lower at 34,686.95 and fell to a low of 34,346.65 during the day. However, buying around the bottom led the index to as high as 34,752.45. The index closed down 1.71 per cent at 34,483.80.

“Bank Nifty has slipped below the recent consolidation on the daily chart suggesting a rise in bearishness,” De said.

“The daily RSI is in a bearish crossover. The index has sustained below 50-day SMA. Going ahead, the trend may remain negative, on the lower end, support is visible at 34,000. On the higher end resistance is seen at 34,800.”