A long bear candle formed on the daily chart that decisively broke below the important support of 16,900-16,800 level, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
“The present chart pattern indicates a downside breakout of the broader high-low range movement of around 17,400-16,900 level. This could be considered as a downside breakout of crucial lower support in the market. This is not a good sign and could have more weakness for the short term,” Shetti said.
Mazhar Mohammad of Chartviewindia.in said that the index has breached critical supports placed around 16,850 and if the downward spiral continues, the weakness shall eventually extend towards its logical target of 16,159 level.
“However, in between, there is a bullish gap placed in the 16,447-418 range. Any rally towards its 200-day exponential moving average (16,865) shall attract selling pressure and strength in the index will not resume unless it closes above the 17,135 level,” Mohammad said.
For the day, the index closed at 16,677.60, down 391.50 points or 2.29 per cent.
Independent Analyst Manish Shah said the Nifty has broken on the lower side following a sideways action of more than two weeks.
“This is redistribution on the lower time frame and signals more downsides in Nifty50. The pattern in play is a range expansion candle that has broken below the support zone. MACD has moved below the zero line and the 20-day moving average has started a downward slope. Nifty has also broken below the 61.8 Fibonacci node of the March-April rally. The index is likely to trade towards 16,400-16,350 over the next couple of days,” Shah said.