Tech View: Nifty50 forms ‘Hanging Man’ pattern; bulls look exhausted
NEW DELHI: Nifty50 on Friday hit 9,900 level for the first ever. But the index could not capitalise on early momentum, as it drifted lower to eventually snap a four-day winning streak.
The index formed a pattern similar to ‘Hanging Man’ on the daily charts, suggesting exhaustion of the ongoing momentum.
In a ‘Hanging Man’ pattern, there is a small real body at the upper end of the candle. There is a long lower wick, which is usually double the height of the real body. A small body and a long lower shadow make the candle looks like a Hanging Man.
Nifty50 opened the day above the 9,900 mark at 9,913.30. But the level proved to be the intrda day high for the index. It saw some selling pressure as it revisited sub 9,850 level, before settling down at 9,886.35, down by 5.35 points or 0.05 per cent.
“The intraday recovery from the day’s low shall not be read as a positive sign, as it resulted in a Hanging Man kind of formation, which is usually seen around the short term tops. The candle suggests exhaustion of the ongoing momentu. Besides technical parameters on lower time frame charts are getting skewed in favour of bears, as we observed at least three bearish formations, pointing towards correction,” said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in.
Chandan Taparia of Motilal Oswal Securities pointed out that the index filled the partial gap of 9,824-9,853 made on Thursday, and recovered most losses to close near 9,900 level.
“Now it has to continue holding 9,850 zone to witness an up move towards 9,950-10,000 zone, while on the downside supports are seen at 9,820, then 9,750 mark,” Taparia added.
Mohammad said that he will not be surprised if the market continues its correction for a couple of more trading sessions, as he strongly advised traders to be in cash for some time.
“It’s always better to be safe than sorry. We continue to remain cautious on the market and would advise staying light in the market continues its correction for a couple of more trading sessions, as he strongly advised traders to be in cash for some time.
“It’s always better to be safe than sorry. We continue to remain cautious on the market and would advise staying light in the market,” sadi Sameet CHavan of Angel Broking.