Tech View: Nifty forms Shooting Star candle. What traders should do on Tuesday
Nifty on Monday fell 247 points to form a Shooting Star candle on the daily chart and violated the crucial support of 20-day EMA placed at 22,370.
The larger degree positive chart pattern like higher tops and bottoms is intact on the weekly chart and present weakness could be in line with the formation of a new higher bottom of the pattern. Still, there is no confirmation of any higher bottom reversal yet at the lows.
Nifty is currently nearing weekly 10-period EMA around 22,200 levels. The said moving average has offered support for the market in the last few months, said Nagaraj Shetti, senior technical research analyst at HDFC Securities.
The daily momentum indicator has triggered a fresh negative crossover, which is a sell signal.
What should traders do? Here’s what analysts said:
Jatin Gedia, Sharekhan
On the daily chart, we can observe that the Nifty is in the process of retracing the rise it has witnessed from 22,710 – 22,776. The key 50 and 61.82% Fibonacci retracement levels are placed at 22,240 – 22,117. Thus, in case of a bounce towards 22,350 – 22,370, it should be used as a selling opportunity. On the upside, the gap area formed on Monday in the range 22,420 – 22,500 shall act as an immediate hurdle from a short-term perspective.
Tejas Shah, Technical Research, JM Financial & BlinkX
Nifty closed below the crucial support levels of 22,500 in Monday’s trading session, which is not a healthy sign. Technically, the break of 22,500 on a closing basis on the daily charts with volumes and a strong
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