NEW DELHI: The Nifty50 dived over 250 points in Friday's selloff to break many short-term support levels on the daily chart, and hinted at a likely trend reversal.
The index formed a 'Long Black Day' on the daily chart, even as it made a 'Bearish Engulfing' candle on the weekly chart, prompting analysts to worry over next week's trading range.
To get some perspective, the index's intraday low of 10,736 level was the lowest point for the index in 12 sessions. With this fall, the index ended the week 435 points off from its 52-week high of 11,171 hit on Monday.
At close, the Nify50 was down 256.30 points, or 2.33 per cent, at 10,760.
Chandan Taparia of Motilal Oswal Securities noted that the index has broken Thursday's High Wave candle's low point and hit a low of 10,736 mark, forming a 'Bearish Engulfing' candle on the weekly chart.
The index is facing resistance at the upper end of the rising supply trend line by connecting the swing highs of 8598, 10,137 and 11,171.
The index formed a 'Long Black Day' formation the daily chart. This, mild negative closings witnessed in preceding three sessions, suggests a possible acceleration in the downtrend, said Mazhar Mohammad of Chartviewindia.in.
"The pace with which the Nifty50 fell suggests a trend reversal in favour of the bears and hence a multi-week top might be in place at the recent high of 11,171, as the index breached critical short-term support points. Selling shall get extended into the next week and take the index towards the 10,500 level, where significant support is seen on the medium-term charts," Mohammad said.
Traders should make use of any rally towards the 10,900 level to lighten up long positions, Mohammad said, adding that the upside is likely to be capped at around 11,000 level for the time being.