The analysts said it is very clear from the formation of the “Doji” candle on the daily chart and formation of “Spinning Top” on weekly trading charts that these signals are not in support for bulls.
Gaurav Ratnaparkhi of Sharekhan said the formation of “Doji Candle” especially after an “Inside Bar” is a clear indication of the market losing its steam on the upside.
“The index seems to be creating a 200-DMA below distribution with the support coming from 10,676 level working as key support and 10,850 level working as a resistance. The lower range end is a low swing and needs to be continuously monitored,” Ratnaparkhi added.
“The Nifty 50 has taken a bullish sequence and developed into “Rising Wedge” since its low of 9,540 level, which is out of momentum now,” Tradebulls Securities, Sacchitanand Uttekar said.
Uttekar advisor of refraining from building fresh longs also mentioned the index has now infiltrated its final stage ahead of a breakdown. Nifty 50 has been holding above its 5-day EMA indicator on a daily chart while RSI indicates a clear negative divergence, cutting average close to overbought zone.
“Nifty50 faced strong resistance at 200-DMA at 10,893 points during the week,” Aditya Agarwala of YES Securities said.
Agarwala also said a continuous trade beyond consolidation channel upper end at 10,850 points will pull it towards 200-DMA at 10,893 and 11,035 points. Profit booking may set in – if bears drag the index below 10,700. In such conditions, the market will drag further down to 10,545 points.”