NEW DELHI: Tuesday marked the second consecutive session when the Nifty50 hit an intraday high in opening trade, but then slipped through the day to barely end above the 10,700 level.In the process, the index formed a Bearish Belt Hold pattern on the daily chart.
The Narrow Range 7 (NR7) pattern has sent a breakdown signal.
In addition to weakness on other technical indicators, this suggests more pain ahead for the index in the short term.
During the session, the index tested the lower end of the bullish gap zone between 10,722 and 10,698 levels hit on June 7.If the index fills this gap and settles below the 10,698 level, it may initially head to test its 50-day EMA of 10,646 from where it had bounced back earlier.
Some relief can be expected only on any close above the 10,835 level, said Mazhar Mohammad of Chartviewindia.in.
The analyst advised traders to make use of rallies towards 10,770 to create fresh shorts with a stop loss at 10,830.
For the day, the index declined 89.40 points, or 0.83 per cent, to end at 10,710.The Nifty50 index broke its immediate supports at 10,750 and 10,720 levels, saw a breakdown from its Narrow Range 7 (NR7) pattern and closed near the support of its rising channel on the daily chart by connecting the recent swing lows of 10,417 and 10,550 levels, said Chandan Taparia of Motilal Oswal Securities.If it sustains below 10,750, profit booking can continue till 10,660 and 10620 levels, he said.
Both the 14-day RSI and Stochastic are in the negative territory.
The daily chart pattern is showing a negative bias and signals more weakness in the short term.
Nagaraj Shetti of HDFC securitiesOn the hourly chart, the index has witnessed a shift in trend as it formed lower tops and lower bottoms, said Rajesh Palviya of Axis Securities.
The index has marked the days low around its 20-day SMA at 10,699, which remains a crucial support zone to watch out for.
An immediate intraday support is placed around the 10,700 and 10,690 levels, and any violation of these levels may accelerate selling pressure, Palviya said.