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Tech View: Nifty forms solid black candle, may see further correction

The near-term upward momentum is fading out, and a phase of correction is setting in.

ETMarkets.com|
Dec 10, 2019, 05.10 PM IST
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Market breadth on Tuesday was sharply negative, which indicated that the overall mood was weak on the Street.
The domestic equity market witnessed a secular bearish session on Tuesday, as Nifty spent the day in a falling trajectory, showing no sign of trend reversal after forming an indecisive ‘Doji’ on Monday.

Before closing the session at 11,856, down 80.70 points, or 0.68 per cent, Nifty shuttled between a high and low of 11,953 and 11,844, respectively.

The 50-share index ended the day at 11,856, even as the price chart formed a Big Black Body that engulfed the small body of the previous session. A black candle occurs when the closing is below the opening level.

Manav Chopra, CMT, Head Research - Equity, Indiabulls Ventures, said profit booking continued after Monday’s Doji formation. “The near-term upward momentum is fading out, and a phase of correction or consolidation is setting in,” he said.

Chopra said the market breadth on Tuesday was sharply negative, which indicated that the overall mood was weak on the Street. “Nifty’s near-term support is placed at 11,800. The index may test its next important support at 11,700, though this level could hold up in the near term,” he said.

Other analysts said the technical setup is looking weak. Momentum indicator moving average convergence divergence (MACD) also hinted at another session of consolidation on Wednesday.

Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia, said if Nifty trades below 11,854 level for more than 30 minutes next session, then it would most likely test the 50-day simple moving average at 11,749, where some buying interest can emerge. “For the time being, Nifty does not promise stability or upside until it closes above the 11,953 level,” he said.
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