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Tech View: Nifty50 forms 'Bearish Belt Hold' on weekly chart; 11,600 level key

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The Economic Times
12th July, 2019 18:13 IST

NEW DELHI: Nifty on Friday settled lower, forming a bearish candle on the daily chart. The index made a ‘Bearish Belt Hold’ on the weekly scale. During the day, it saw pressure at 11,600 level but made some recovery to its immediate support of 11,520 level.

Analysts said breaching the 11,600 level will be key to instill confidence. Till then, the index may continue to stay in a range.

For the day, the index fell 30.40 points, or 0.26 per cent, to 11,552. The junction of 40-hour exponential moving average and the hourly upper Bollinger Band acted as a key barrier, said Gaurav Ratnaparkhi of Sharekhan

“The index has formed a Bearish Flag pattern on the hourly chart with a mild throwover. It will be set for a sharp decline once the pattern breaks on the downside. The weekly chart shows that the bears dominated the session, resulting in the breach of the 20-week moving average, which is a crucial medium-term moving average. The crux is that the bears right now are occupying a dominant position,” Ratnaparkhi said.

Mazhar Mohammad of said the index appears to be consolidating around its demand line of a multi-week ascending channel, which is in progress from the high of 10,941 hit in December 2018.

“As long as the index sustains above and consolidates inside the said channel, whose support is placed around 11,530 for the next session, the bulls will have a fair chance of making a comeback. A close above 11,600 level can be considered as a initial sign of strength,” he said.

The opening downside gap of last week is intact and the last two weekly candle patterns signalled a lower top reversal as per weekly timeframe chart.

Nagaraj Shetti, Technical Research Analyst, HDFC Securities said that the short-term outlook for Nifty50 is weak.

“The crucial overhead resistance of 11,625-650 levels is unlikely to be broken decisively on the upside during next week. The level of 11,425 will be the lower level one mat watch out for in the next few sessions.”

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