Tech View: Multiple tech indicators on Nifty chart hint at trend reversal

Tech View: Multiple tech indicators on Nifty chart hint at trend reversal

NEW DELHI: Nifty50 declined for the fourth session in a row on Friday and slipped below the all crucial 15,000 mark. The 50-pack index formed a bearish candle on the daily scale and ‘Bearish Engulfing’ pattern, a trend-reversing formation, on the weekly scale. Adding to the concerns was the momentum indicator MACD, which is sending out a sell signal.

All this, and the recent lower high-low formations, have made analysts believe the index could drift towards the 14,400-14,700 range in the coming days.

Any upside will be vulnerable to selloffs, they said. For the day, Nifty closed at 14,981, down 137.20 points or 0.91 per cent.

After the four-day correction, the MACD has triggered a ‘sell’ signal on the daily chart. The MACD is known for signalling trend reversals in traded securities or indices. It is the difference between the 26-day and 12-day exponential moving averages. A nine-day exponential moving average, called the ‘Signal Line’, is plotted on top of the MACD to indicate ‘buy’ or ‘sell’ opportunities. When the MACD crosses below the Signal Line, it gives a bearish signal.

“The advance-decline ratio also remained negative for three of the last four sessions. The market’s trajectory suggests ‘sell on rallies’. On Monday, if the bulls manage to defend the 14,898 level, they may make an attempt to get past the 15,000 level, which would anyway remain vulnerable to selloffs,” said Mazhar Mohammad of
“The short-term momentum indicator has turned in favour of the bears,” said Gaurav Ratnaparkhi of Sharekhan, who believes the index is poised for further decline.

Check out the candlestick formations in the latest trading sessions

“The 14,400 level is the short-term target on the downside,” he said.

Chandan Taparia of Motilal Oswal Securities said as long as the index remains below 15,150 level, it would continue to see weakness and head towards its next key support at 14,800 and 14,700 levels.

On the upside, he said, hurdles are seen at 15,250 and 15,400 levels.

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