Tech View: Nifty forms Bearish Belt Hold, tests the crucial 34-day EMA

Tech View: Nifty forms Bearish Belt Hold, tests the crucial 34-day EMA

NEW DELHI: Nifty50 on Wednesday slipped below the 14,000 mark, as it formed a ‘Bearish Belt Hold’ candle on the daily chart. Such a candle is formed when the day’s open becomes the day’s high point and the index sees selling through the rest of the session, reflecting bear domination.

Analysts said the index tested its 34-day exponential moving average (EMA) during the session and hit an intraday low of 13,929. This level can now prove to be a crucial support for Nifty, followed by the 13,765 mark, they said.

“The importance of 34-EMA stems from the fact that Nifty tested and consolidated around the said average for three sessions in October 2020, before resuming its rally from the low of 11,535 level,” said Mazhar Mohammad of

Defending the 13,929 level could, thus, give hope of consolidation around this level. “In case the bulls fail to defend the said level, weakness on the index will extend towards 13,700 level, where the 50-day simple average is placed,” Mohammad said.

Check out the candlestick formations in the latest trading sessions

For the day, Nifty closed at 13,967, down 271.40 points or 1.91 per cent. With this, the crucial immediate support of 10- and 20-day EMAs have been broken and the upward sloping trend line connecting the swing lows of October 30 to December 21 has been violated at around 14,350 as per the daily timeframe chart.

“On the weekly chart, Nifty has formed a long negative candle so far, after the formation of Doji and High Wave in the previous two weeks. The reversal pattern as per the weekly chart was also seen and Nifty is expected to slide lower,” said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

This analyst sees a crucial base for Nifty at 13,765 level for any recovery.

Shrikant Chouhan of Kotak Securities, meanwhile, did not rule out any short-term relief rally. “The strategy should be to buy at current levels and keep a final stop loss at 13,700 (around the 50-day SMA) for the same,” he said.

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