Tech View: Nifty breaches multiple patterns to signal further declines
The index has started forming lower highs and lows for the past two sessions.
During the session, the index broke below the lower end of a ‘Triangular’ pattern, which worsened the decline, said Gaurav of Sharekhan. A similar structure was seen in Bank Nifty, making analysts predict that Nifty50 would soon retest the August low of 10,782.
“In terms of the Wave structure, the index seems to have started the fifth leg of an ‘Impulse’ on the downside. The crucial target on the downside is at 10,455, which is the 78.6 per cent retracement of the October–June rally. On the other hand, the lower end of the triangular pattern, which is near 11,000, will now pose resistance in the case of a minor degree bounce,” Ratnaparkhi said.
Chandan Taparia of Motilal Oswal Securities, said Nifty has seen a breakdown of its Bearish Flag formation and this development has dashed hopes of any bounceback for the index.
Mazhar Mohammad of Chartviewindia.in said a relatively bigger fall on Wednesday suggested that the index may break below the 11,150-10,900 range soon.
“If the 10,900 level is taken out decisively on Thursday, Nifty will eventually head to make new corrective swing low below 10,782 level. To prevent this damage, the bulls need to defend the 10,900 level, which will also defend the range for some more time. Nifty is unlikely to show strength unless the 11,120 level is broken on a closing basis,” Mohammad said.
For the day, the index fell 98.30 points, or 0.89 per cent, to 10,918. The index has started forming lower highs and lows for the past two sessions.