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Tech View: Nifty forms Bearish Belt Hold pattern, looks oversold

The market bias remained negative, but the 11,310-320 range could offer support.

, ETMarkets.com|
May 08, 2019, 06.01 PM IST
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Nifty has approached the trendline support in the 11,320-11,310 range.
NEW DELHI: After breaking below the crucial range between 11,550 and 11,850 levels on Tuesday, NSE barometer Nifty50 on Wednesday extended its slide into the sixth day. The index settled in the oversold zone on the shorter time-frame chart.

The market bias remained negative, but the 11,310-320 range could offer support. Analysts said any respite to the index would be shortlived and advised traders to opt for a ‘sell on rise’ strategy.

For the day, Nifty fell 138 points, or 1.20 per cent, to 11,359. It formed a large bearish candle on the daily chart that resembled a Bearish Belt Hold pattern.

“Nifty has approached the trendline support in the 11,320-11,310 range. It has also reached the extreme oversold zone, which suggests a short covering rally is likely in the coming sessions. But, a move below 11,310 can extend the correction to 11,275, 11,225 levels,” said Aditya Agarwala, Senior Manager at Yes Securities.

The 50-pack index has breached the junction of the 40-day EMA, the daily lower Bollinger and lower end of a falling channel with a decisive margin.

“This shows the bears are having an upper hand. But the intraday momentum indicators, are showing oversold readings, which may result in a minor bounce till the 11,450-11,480 range. Nevertheless, the bounce should be used as a selling opportunity,” said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.

Mazhar Mohammad of Chartviewindia.in believes the index needs to close above 11,485, else it will head towards the bullish gap zone between 11,227 and 11,181 levels registered on March 12.

"This downward corrective leg is likely to continue next session and could reach the next support at 11,280 in the next couple of sessions,” said Nagaraj Shetti – Senior Technical & Derivative Analyst, HDFC Securities.

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