market outlook: Tech View: Nifty forms bearish candle; bears may drag it lower

NEW DELHI: Nifty continued to consolidate on Monday and settled below the psychologically important 9,000 mark. In the process, the index formed a bearish candle on the daily chart. Analysts said a move above the 9,130 level may give momentum to the index, which has its immediate support at 8,770 level.

“The index consolidated after rising for three consecutive days. It traded above its recent swing top on a minor scale. The near-term oscillators continued to remain in buy mode. It may resume the rising trend towards 9,270 and 9,320 levels once it decisively takes out the 9,130 level,” said Arun Kumar, Market Strategist at Reliance Securities.

For the day, the index fell 118 points, or 1.30 per cent, to close at 8,993. The immediate support for the index comes at 8,770 level in the form of a 13-day exponential moving average, a breach of which shall confirm near-term weakness, said Mazhar Mohammad of Chartviewindia.in.

“The index will gain strength on any close above the 9,131 level. In that scenario, we expect the rally to extend towards the 9,700 and 9,900 levels,” he said.

Gaurav Ratnaparkhi of Sharekhan said the index continues to face resistance in the 9,100-9,200 zone.

The hourly chart, he said, shows Nifty is in process of forming a distribution since the last few sessions.

“The distribution is under way near the upper end of a Bearish Wedge pattern. Thus, the bears seem to be warming up before they kickstart a fresh downward move. The broader market indices are gearing up for another round of selloff. A fresh short position can be initiated once Nifty breaks the 8,900 level on the downside. The initial target on the downside will be at 8,650,” Ratnaparkhi said.