NEW DELHI: The Nifty50 slumped 150-odd points on Friday to settle a tad above the 10,300 level. A gap-down opening and a Spinning Top-like candle on the daily chart a day after a 'Bearish Engulfing formation do not bode well for the index.
Add a bearish candle on the weekly scale, the bears look firmly in the drivers seat. The index may test the recent low of 10,138, while upside hurdle is seen at 10,450. On Friday, Nifty fell 149.50 points, or 1.43 per cent, to close at 10,303.
“As per the weekly timeframe chart, Nifty has formed a negative candle with a long upper shadow, which indicates a sharp negative reversal from the recent highs. The weekly RSI is also sending out a negative signal,” said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
Fridays unfilled opening downside gap could now be considered a bearish breakaway gap. “Normally, such breakaway gaps are formed near the tops/lower tops and indicate a negative reversal pattern. Niftys underlying trend is weak, and one can expect a downside break of the recent swing low of 10,138 level next week,” Shetti said.
Owing to back-to-back sharp corrections, a pullback cant be ruled out going forward, said Mazhar Mohammad of Chartviewindia.in. Ideally, any such move should be utilised to create fresh shorts, he said.
On such a pullback, the index may face resistance as it enters the bearish gap zone between 10,380 and 10,436 levels in Fridays session. If the index breaches the 10,249 level on Monday, it may retest the recent corrective swing low of 10,138, Mohammad said.
Chandan Taparia of Motilal Oswal Securities expects Nifty to fall below 10,400. It could slip towards its crucial support of 10,200 and then 10,138 marks. The upside hurdle is seen in the 10,450-10,500 range, he said.