NEW DELHI: The bulls failed to push the Nifty50 into the positive terrain even for once in Wednesdays session. The tough resistance at the 10,630 level proved too hard to breach, and the index eventually settled the day at sub-10,600 level.
The index formed a bearish candle on the daily chart, similar to a Hanging Man pattern, and formed lower highs and lower lows. Holding above the 10,500 level is the key for the Nifty50 to retain the recent bullish setup, experts said.
In the near term, if the Nifty50 breaks below its key support at 10,500 on a closing basis, the short-term trend is likely to reverse to the downside and the index may slide further towards 10,440 and 10,400 levels. On the upside, the index is likely to face a stiff hurdle at 10,640 level, said Rajesh Palviya of Axis Securities.
Daily indicators such as RSI and Stochastic have turned negative from the overbought zone, which signals possible price correction ahead, Palviya said. For the day, the Nifty50 fell 43.80 points, or 0.41 per cent, to close at 10,570.
The Nifty50 appears to have registered a 'Hanging Man' like formation. But the trend was still in favour of the bulls, the index recouped half of its intraday losses by the end of the day.
Besides, it did not violate any of the critical averages or supports on the short-term charts. Hence, traders shall continue to retain their bullish outlook as long as the Nifty50 sustains above 10,500 level on a closing basis, said Mazhar Mohammad of Chartviewindia.in.
Chandan Taparia of Motilal Oswal Securities said the index has failed to surpass the immediate resistance in the 10,630-10,640 range. Now it has to hold above 10,520 to extend its move towards 10,630 and then 10,666 level, while a major support exists in the 10,500-10,480 range, he said.