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Tech View: Nifty50 forms Dark Cloud Cover; get ready for a roller coaster ride

Aggressive bets ahead of the election outcome are not recommended, says Sameet Chavan.

, ET CONTRIBUTORS|
May 21, 2019, 05.36 PM IST
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In two-candle ‘Dark Cloud Cover’, an index opens with a gap-up, but ends up retracing at least 50 per cent of the previous session’s bullish candle.
NEW DELHI: The NSE Nifty50 on Tuesday took a heavy beating as the bulls looked exhausted following Monday’s euphoric rally. The index formed a ‘Dark Cloud Cover’ on the daily chart, but managed to form higher high-higher low pattern for the fifth straight session.

In two-candle ‘Dark Cloud Cover’, an index opens with a gap-up, but ends up retracing at least 50 per cent of the previous session’s bullish candle.

“This pattern essentially indicates a reversal of prior trend. However, the pattern will be confirmed only, if the index closes below 11,708. Given the overall sentiment, we expect high volatility over the next couple of days. The index may find support at 11,550 and 11,620,” said Arun Kumar, Market Strategist at Reliance Securities

On Tuesday, the index hit an all-time intraday high of 11,883.55, before closing at 11,709.10, down 119.15 points, or 1.01 per cent.

“The bulls and bears are in a tug of war to decisively surpass the recent high,” said Chandan Taparia of Motilal Oswal Securities.

Sameet Chavan of Angel Broking sees wide trading range for the index. He advised traders to lighten up positions a bit and prepare for roller coaster moves.

“Aggressive bets ahead of the election outcome are not recommended,” he said.

Kumar also feels that investors should refrain from initiating fresh long positions and follow stop loss strictly.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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