Tech View: Nifty50 weekly chart signals more weakness ahead

The index has been trading below its key moving averages now. Analysts said that while a small bounce can’t be ruled out, the ongoing pain in the market is unlikely to ease in the near future.

Mazhar Mohammad of Chartviewindia.in said a bear candle on the weekly charts, the fourth week in a row is emphasising the bear domination in the market.

“In this process, Nifty50 also bridged the bullish gap present between 16,447 and 16,418, registered on March 10, which was supposed to act as a support point. Hence, remaining below 16,400, the next logical target for the index shall be around the 16,150 level. In between, any pullback attempt may perish around 16,650 level,” he said.

For the day, the index closed at 16,411.25, down 271.40 points or 1.63 per cent.

“Nifty seems to have taken support of 16,350 level, before showing intraday consolidation. Normally, a formation of Doji after a reasonable weakness alert regarding trend reversal on the upside. The confirmation by the way of a sustainable close above 16,500 level could open upside bounce in the market,” said Nagaraj Shetti at HDFC Securities.

Shetti said the larger degree of lower tops and bottoms is on the cards and the weekly chart indicates a possibility of the new lower bottom formation below 15,671 levels in the coming few weeks.

“For traders, 16,300 would be the key support level. However, a quick intraday pullback rally cannot be ruled out if the index succeeds to trade above 16,300. Above the same, the pullback rally could continue up to 16,550-16,700.

Below 16,300, selling pressure is likely to intensify, and below the same, Nifty50 could touch the level of 16,150-16,000, said Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities.