Nifty on Friday fell for the second straight session and settled the week below the 18,300 level. The NSE barometer formed bearish candles on both daily and weekly charts. The candles had long upper wicks, suggesting selling at higher levels. Analysts said the 50-pack index had broken below the immediate support of 18,350 and it is likely to see a further fall, before making a recovery.
Chandan Taparia of Motilal Oswal Securities said the 50-pack index broke its immediate support of 18,350, and that the bearish candle on the daily chart indicated pressure at higher zones.
“It formed a bearish candle on the weekly frame and negated its higher lows of the last two weeks. Now, till it holds below 18,350, weakness could be seen towards 18,081 and 18,000 zones whereas hurdles are placed at 18,350 and 18,442 zone,” Taparia said.
For the day, the index closed at 18,269, down 145.90 points or 0.79 per cent. For the week, the index was down 227.60 points or 1.23 per cent.
“Since the market was deeply overbought, we must consider this as a running correction. On the flip side, 18,450-18,600 are to be treated as immediate hurdles. If the bulls have to regain their strength, 18,450 needs to be surpassed with some authority, which will negate the breakdown from the small ‘Head and Shoulder’ pattern on the daily time frame chart.
Traders are advised to stay light for a while. Let either the market completes its correction first or reclaim key levels on the upside to resume the bullish trend,” said Sameet Chavan of Angel One.
Independent Analyst Manish Shah said a sharp decline brought Nifty down from 18,650 to 18,250 in two days.
“The decline from the 18,900 high is breaking down in three swings, making it a possible AB=CD pattern. The PRZ (Potential Reversal Zone) for the pattern is at 18,150-18,100. So, there could be another 100-odd point decline from current levels, before the Nifty turns up. That said, Nifty has dropped by almost 600 points from the highs and this makes it slightly oversold,” Shah said adding that the NSE barometer needs to turn and break above 18,710 for a dependable signal.
Amol Athawale, Deputy Vice President – Technical Research at Kotak Securities said lower top formation on the daily chart and double top reversal formation on the intraday chart is indicating further downside from the current levels.
“In addition, the Nifty not only broke the important support level of 18,400 but closed below the same. The next support level for the index would be 50-Day SMA or 18,100-18,000 levels. On the flip side, 18,400 could act as an immediate resistance zone for the index, and above the same the index could retest the 20-Day SMA or 18,550. In case of further upside, the index could move up to 18,700,” Athawale said.