The fact that Nifty could not defend its immediate support at 14,450 level has made a few analysts turn wary on the recent rally. This is especially after a couple of Hanging Man formations on the daily charts in recent days, which signalled a trend reversal.
A few analysts said Friday’s fall could just be a single-day affair, but for that to be true the index needs to close above the 14,500 level on Monday, they said.
Friday’s loss erased almost all the intra-week gains, which led to the formation of Gravestone Doji on the weekly scale, said Mazhar Mohammad of Chartviewindia.in.
“On Monday, a close below the 14,357 level may confirm the trend reversal in favour of the bears. In that scenario, Nifty50 may initially fall towards the 14,050 – 13,950 zone. If the recent high of 14,653 level proves to be a multi-week top, eventually a bigger correction of 10-15 per cent can’t be ruled out,” he said.
Rajesh Palviya of Axis Securities said Friday’s price action might just be a small pullback. The index continued to move in a higher high-higher low formation on the hourly chart, indicating a positive bias.
Check out the candlestick formations in the latest trading sessions
Palviya said the index needs to cross and sustain above the 14,500 level for any buying to occur. “If Nifty breaks below 14,400 level, it would trigger selling towards the 14,300-14,200 zone,” he said.
For the day, Nifty closed at 14,433 level, down 161.90 points or 1.11 per cent. “Friday’s sharp decline looked like a one-day drop as per the symmetrical chart pattern. We expect Nifty to show an upside bounce to retest the new high of 14,653 next week. On the flip side, a sharp follow-through weakness over the next 1-2 sessions is expected to negate this pattern. The immediate support is placed at 14,350 level,” said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.