Markets

Tech view: Nifty50 forms Dark Cloud Cover pattern, signals downside ahead

NEW DELHI: The Nifty50 fell on Friday to end up forming a bearish candle on the daily chart, which resembled a Dark Cloud Cover pattern, suggesting possible downside ahead.

The index made a Three Black Crows formation on the daily chart, reflecting negative bias in the market.

A Dark Cloud Cover pattern may have negative repercussions, which will be confirmed if the Nifty50 closes below the 10,600 level, said Mazhar Mohammad of Chartviewindia.in

As the technical picture is slowly tilting in favour of the bears on the short-term charts, traders are advised to remain cautious going into the election week, Mohammad said.

On Friday, the Nifty50 settled at 10,618, down 61.40 points, or 0.57 per cent. The index slipped below its five-day and 13-day exponential moving averages (EMAs).

The 'Three Black Crows' formation on the daily scale signals that the bears are tightening their grip on the market at higher levels, said Chandan Taparia of Motilal Oswal Securities.

He, however, noted that the index has been respecting its support levels.

“It has been making lower highs and lower lows for last two sessions. As long as it holds below 10,638, weakness could be seen till 10,550 and 10,500 levels. On the weekly chart, the index closed in the negative after positive close for five weeks. This indicates a pause in positive momentum and requires some consolidation to kick off the next upward move,” Taparia said.

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