Tech View: Nifty forms bearish candle as supports shift lower

NEW DELHI: Nifty settled December F&O series at 12,126 on Thursday and in the process it formed a bearish candle for the second successive session, with a lower high-low formation for the third day. This showed supports are shifting lower.

Momentum oscillator RSI showed triple-negative divergence and turned southward on the daily chart, which does not bode well for the bulls, analysts said.

“Since the index closed below its immediate support at 12,158 level, a further correction towards the 12,050-12,000 zone cannot be ruled out. On the upside, the immediate hurdles are placed at 12,220 and 12,300 levels,” said Chandan Taparia of Motilal Oswal Securities.

Nifty ended the day 88 points, or 0.72 per cent, lower.

“For the time being, traders are advised to avoid buying the dips while positional traders can consider shorts on any recovery attempt in the next session, preferably around the 12,150 mark, with a stop loss above 12,200 level on a closing basis. Intraday traders can go short below 12,118 level and look for a target of 12,020 with a stop loss above the day’s high,” said Mazhar Mohammad of Chartviewindia.in.

The hourly Bollinger Bands are expanding sharply after a significant contraction and the ongoing correction is likely to get deeper, said Gaurav Ratnaparkhi of Sharekhan.

“Nifty can come down to test the key psychological mark of 12,000. In terms of price pattern, a broadening of formations looks under way in Nifty, which has started sliding down from the upper end of the pattern. The broader market indices are at the tipping point from a short-term perspective,” he said.