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Tech View: Nifty forms Bearish Belt Hold, outlook turns bearish

Any bounce towards 10,880-10,900 can be seen as an opportunity to initiate fresh shorts.

, ETMarkets.com|
Sep 17, 2019, 05.05 PM IST
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NEW DELHI: Nifty50 saw selling pressure from the word go on Tuesday and tested the 10,800 level in intraday trade, before forming a Bearish Belt Hold candle on the daily chart. A drop below the 10,870-10,950 range made technical analysts turn bearish on the index outlook and they now feel the recent swing low of 10,637 is achievable.

The index has broken its rising support trend line by connecting the swing lows of 10637, 10,746 and 10,880 levels, said Chandan Taparia of Motilal Oswal Securities.

“Nifty has broken its immediate support at 10,950 after completing its NR4 pattern. It has started forming lower highs for last two sessions. As long as it holds below 10,880, weakness could continue till 10,750 level. On the upside, a major hurdle is seen at 10,950 level,” Taparia said.

The breakdown from the lower end of the pattern on a closing basis suggests the index has a significant downside on the cards, said Gaurav Ratnaparkhi of Sharekhan. “The benchmark index is now set to test the August low of 10,637 with potential to tumble towards 10,455 level in the short term. Hence, any bounce towards the 10,880-10,900 zone can be seen as an opportunity to initiate fresh short positions,” Ratnaparkhi said.

For the day, the index closed at 10,817, down 185 points, or 1.69 per cent.

“The breakdown is likely to threaten the recent bottom of 10,637 level registered in August. The upside remains capped around 11,084 level. Positional traders with high risk appetite are advised to create short positions now and on rallies towards 11,000 level with a stop loss above 11,100 on a closing basis and a target of 10,637,” said Mazhar Mohammad of Chartviewindia.in.

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