NEW DELHI: Nifty50 on Friday fell for the third straight day and closed below its 50-day moving average. The index formed a bearish candle on the daily chart, with a lower wick, reflecting the support that the NSE barometer took intraday near its 200-day moving average.
On the weekly scale also, the NSE benchmark formed a bearish candle. Analysts said the consolidation in the index may continue and that the 17,000-17,450 range may stay intact.
Chandan Taparia said that while small bodied bearish candles were made on weekly and daily scales, a follow up was missing on either side. Nifty50, he said, has got stuck in a broader trading range of 17,000-17,400 for the last six sessions and that a hold above 17,100 can send it towards 17,350 and 17,500 levels.
“At a recent high of 17,442 on March 23, the daily MACD generated a buy signal as it crossed the equilibrium line after a prolonged period. Usually, it is observed that such crossovers after a sharp upmove will lead to consolidation before the resumption of the upswing,” said Mazhar Mohammad, Chief Strategist – Technical Research, Chartviewindia.in.
Mohammad said unless Nifty50 closes below its 17,000 level, where it also coincides with the 200-day moving average, the probability of resuming the upswing shall remain much higher, “though it will be confirmed on a close above 17,450 levels,” he added.
For the day, the index closed at 17,129.65, down 93.10 points or 0.54 per cent.
“The underlying trend of Nifty continues to be range bound with weak bias. The broader uptrend status remains intact as long as Nifty sustains above 16800 levels. A decisive decline below this area is likely to trigger downward correction and a sustainable move above 17450 could open renewed buying interest in the market for next week,” Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
Independent Analyst Manish Shah said that MACD is still in sell mode on the weekly time frame as Nifty50 faces resistance from the weekly 20-period moving average.
“On the daily charts, a status quo is maintained as we see a fairly predictable range between 17050-17450. Volatility in the last couple of trading sessions has seen major contraction. A market condition such as this cannot remain forever and sooner or later one side has to blink,” he said, expecting a quick rally on Nifty50 once 17,450 is taken out.
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