NEW DELHI: Nifty50 tumbled over 550 points on Friday and formed an Island Reversal pattern on the daily chart. On the weekly scale, it formed a bearish candle, along with a lower high lower low formation. The candle patterns suggest a bearish bias for the market.
For the day, the index closed at 14,529.15, 568.20 points or 3.76 per cent. During the session, the index took support from its 50-day simple moving average, whose value is placed at 14,445. The levels around 14,460-14,300 will be keenly watched, analysts said.
Mazhar Mohammad said that Friday’s gap down opening as a follow through to Thursday’s gap up opening has resulted in a bearish formation called ‘Abandoned Baby’ on candlestick charts, which is popularly known as Island Reversal in conventional technical charting.
ETMarkets.com“It looks inevitable for the index to revisit and bridge the bullish gap zone, registered on February 2, present in the 14,469-336 range. There seems to be a confluence of additional support points in this region such as the 50-day exponential moving average, with a value present around 14,400 levels. Hence, a near-term bounce can be expected from the zone of 14,460 to 14,300 levels,” he said.
Gaurav Ratnaparkhi of Sharekhan said that the recent bounce got halted near the 61.8 per cent retracement of the previous decline. The analyst noted that the index has broken the swing low of 14,635 and is approaching the daily lower Bollinger Band and the range for Nifty has shifted lower to 15,000-14,400 levels.
Check out the candlestick formations in the latest trading sessions
ETMarkets.com
Chandan Taparia of Motilal Oswal said that till the index remains below 14,650 level, weakness could be seen on Nifty50 towards the 14,400-14,300 range. Upside hurdles, he said, will be seen at 14,750 and 14,850 levels.
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