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Tech view: Tech View: Nifty50 forms ‘Spinning Top’ as investors turn wary at higher levels

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NEW DELHI: Nifty50 fell nearly 100 points on Wednesday despite decisively breaking above a crucial resistance level in the previous session. The index formed an ‘Spinning Top’ candle on the daily chart, suggesting indecisiveness among traders at higher levels. Analysts say support for the index stands at 11,050 level, while they expect the NSE barometer to face resistance in the 11,050-11,380 range.

“Nifty faced steep selling pressure as it approached the 11,350-11,380 range. The short-term momentum indicator is showing a negative divergence, which is a bearish sign. These observations suggest weakness is creeping in. Structurally, the index is still in sideways mode within the 11,050-11,350 range. It will be in for a deeper correction once the lower end of the range breaks,” said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.

For the day, the index closed at 11,202, down 97.70 points or 0.86 per cent. Aditya Agarwala of YES Securities said the bulls failed to keep the index above the consolidation breakout of 10,240 that took place in the previous session.

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“A sustained trade beyond the 11,240 level in the coming session may help Nifty resume the uptrend and take it higher. A failure to trade above the 11,240 level may drag the NSE index lower towards the 11,050 mark. The RSI indicator has turned lower from the 70-76 levels, indicating that the uptrend is losing steam and minor profit booking is under way,” Agarwala said.

Despite Tuesday’s breakout, Nifty remained inside the 25-day-old ascending channel on Wednesday, whose resistance point for the next session is placed at 11,380.

“The index is struggling to get past the upper boundary of the channel for last six sessions. Unless Nifty50 decisively closes above the said channel, a sustainable rally cannot be expected. Meanwhile, it will be critical for index to sustain above the 11,149 level, as breach of this on a closing basis may trigger a fresh bout of selling pressure,” said Mazhar Mohammad of Chartviewindia.in in a note.

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