Tech view: Don’t read too much into Friday’s rally, Nifty bias still negative

NEW DELHI: Nifty on Friday recovered most of the intraday losses to settle flat. The index formed a bearish candle resembling a ‘Hammer’ on the daily chart. A Hammer is formed, when the open, high and close of the index roughly remain the same.

Analysts said one must not read too much into Friday’s recovery. The trend, they said, remains negative with Nifty heading towards the 8,900 level now a real possibility. The immediate support is seen at 9,050 level.

“The Bearish Island Reversal pattern is still intact with two unfilled gaps. This pattern could be negated on a decisive move above the 9,500-9,600 zone. As long as this pattern remains active, the chances of Nifty sliding down to the 8,900 level can’t be ruled out,” said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

For the day, the index fell 5.90 points, or 0.06 per cent, to 9,136.

“This minor recovery itself should not be construed as a sign of strength unless Nifty50 strongly registers a close above the 9,300 level. Meanwhile, the near-term trend is likely to remain sideways in the 9,350-9,043 range, but with a negative bias,” said Mazhar Mohammad, Chief Strategist at Chartviewindia.in.

Check out the candle formations in the latest trading sessions

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Mohammad said considering two strong gap-down openings in the past couple of sessions, and the bearish reversal formations largely intact, the possibility of an upside breakout remains low.

Manish Hathiramani, Technical Analyst at Deen Dayal Investments, said a breach of the 9,040 level would lead to a further downside in Nifty. Key resistance remains in the 9,400-9,450 zone, he said.

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