Tech View: Doji candle on Nifty chart after a steep fall raises rebound hope

Tech View: Doji candle on Nifty chart after a steep fall raises rebound hope

NEW DELHI: Nifty50 on Thursday formed a ‘Doji’ candle on the daily chart, as buying emerged at lows, helping the index settle above the 13,800 mark. While it is an indecisive candle, a Doji after a sharp drop gives hope of a trend reversal. A confirmation, though, will still be needed.

The index closed the session at 13,817, down 149 points or 1.07 per cent. During the day, Nifty breached its 50-day simple moving average and also tested the 61.8 per cent retracement of the December-January rise at 13,750, a level that later offered some cushion.

“Thursday’s low of 13,713 now becomes the near-term support. Fresh shorts can be initiated once this low breaks. A subsequent target on the downside would be 13,500. On the higher side, the gap area between 13,898 and 13,929 levels will act as a resistance in case of any minor degree bounce,” said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.

The formation of Doji after a reasonable decline or at the swing low could be a part of a bullish reversal pattern, but is needs confirmation, said Nagaraj Shetti of HDFC Securities.

Check out the candlestick formations in the latest trading sessions

“On the weekly chart, Nifty has reached its crucial immediate support at 13,750 (10-week EMA) and is placed slightly higher. Previously, this moving average had offered support to the index during October-November and in December. Hence, Nifty sustaining above this support can open ground for a pre-Budget bounce,” Shetti said.

The 50-day SMA now stands at 13,705.

“It looks critical for the index to defend and sustain above 13,700 level, and a failure to do so shall extend the weakness towards the next logical target of 13,455. If the 13,700 level is defended well, it may trigger a consolidation in the 13,900-13,700 zone, whereas a close above 139,29 level would show signs of strength,” said Mazhar Mohammad, Chief Strategist at

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