The Nifty50 which started on a positive note on Friday but failed to keep the momentum going and wiped out gains made in a trade to close in red, but above its crucial 200-days exponential moving average (DEMA). The index formed a bearish candle on the daily charts but made a Bearish Belt Hold kind of pattern on the weekly charts which suggest that the pain may not be over.
A ‘Bearish Belt Hold’ pattern is formed when the opening price for the week becomes the highest point of the week and the index declines throughout the trading week making up for the large body. The candle will either have a small or no upper shadow and small lower shadow. A ‘Bearish Belt Hold’ pattern is formed when the opening price for the week becomes the highest point of the week and the index declines throughout the trading week making up for the large body. The candle will either have a small or no upper shadow and small lower shadow.
On Friday, the index opened at 10,271 and rose marginally to hit an intraday high of 10,296. But, bears soon took control and pushed the index towards 10,200 to hit an intraday low of 10,211. It closed 15 points lower at 10,226.85. The index is likely to remain volatile in the coming week and the pattern will be confirmed if Nifty closes in red on Monday as well. After such a steep decline there is a higher possibility of Nifty forming a base around its 200-DEMA, suggest experts. Widely tracked Supertrend indicator also gave a sell signal on the weekly charts which suggest that bears are likely to remain in control at least in the short term. As the name suggests, 'Supertrend' is a trend following indicator just like Moving Averages and MACD (Moving Average Convergence Divergence). It is plotted on prices and their placement indicates the current trend. The MACD also gave a Sell signal in the previous trading session.
The Nifty index has a strong support near 10,004 levels which is its 50-DMA. It broke below its 20-DEMA on the weekly charts on Friday. “The Nifty50 registered a small bearish candle after moving in a narrow range of around 80 points but on weekly charts, it witnessed a Bearish Belt Hold kind of formation suggesting intense selling pressure throughout the week,”
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