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Tech View: Nifty continues bearish formation; upside capped at 9,050

Analysts expect selling to emerge on any fall below the 8,800-8,850 range.

, ETMarkets.com|
Last Updated: May 19, 2020, 05.52 PM IST
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During the session, the index faced resistance near the 20-hour moving average as well as near a falling trendline, said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.
NEW DELHI: Nifty on Tuesday failed to capitalise on a strong start and witnessed selling pressure at a key resistance point at 9,000 level.

The index eventually ended with modest gains, forming an Small Bearish Candle on the daily chart. Analysts expect selling to emerge on any fall below the 8,800-8,850 range. They see upside for Nifty50 capped at 9,050 level in the near term.

For the last two days, Bank Nifty has refrained from rejoicing the bullish momentum seen in global markets, said Shrikant Chouhan, Executive Vice-President for Equity Technical Research at Kotak Securities

"Nifty has also seen the continuation of bearish formation. We believe traders must remain careful below the 8,850 level of Nifty50, as the index may fall to 8,700 or 8,500 level in the near term.” the Kotak analyst said.

For the day, the index closed at 8,879, up 55.85 points or 0.63 per cent. With this, the index snapped a three-day losing streak. Analysts, however, were not enthused.

During the session, the index faced resistance near the 20-hour moving average as well as near a falling trendline, said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.

Check out the candle formations in the latest trading sessions
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“The breakout level for the index on the downside stands at 8,806. From a trading perspective, a fresh short position can be initiated once the swing low of 8,806 breaks. In such a situation, the short-term target on the downside will be 8,400. The 9,000 and 9,050 levels will continue to act as a key hurdle,” Ratnaparkhi said.

Tuesday's index gains were made on the back of negative market-wide advance-decline ratio, which suggests a majority of market participants might have used this rally to either pare existing holdings or create fresh shorts, said Mazhar Mohammad Chartviewindia.in.

Mohammad said a fall below the 8,800 level on a closing basis may accelerate selling pressure on Nifty50 with an initial target of 8,500 level.

"Take a neutral stance and consider fresh shorts only below the 8,800 level," he said.
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