Hourly Chart

Shooting Star Formation and a Gap Down, Market Plunges approx. 175 Points

by Mitali Dutta on Market Analysis, Market Wrap

Nifty close 10943.60: This week the index had a great start. The momentum and the positive sentiment helped the stock market to ride up to 11100 mark. But on that same day (Touching 11100 mark) the market makes a Doji formation and it was after an uptrend. The following day market opens with a gap down and as usual it’s a Red candle.

Now the question is where will be the market heading?

If we combine the last three candles it is nothing but a Shooting star formation (Inverted Hammer shape after an uptrend) and it suggest Bearish sentiment might take place in the market.

As we know, no one can confirm what is going to happen in the next day. Just like that in the market it is impossible to being right 100%. We can just predict what could take place and we plan our trade according to that.

There is a saying – plan your trade and Trade your plan.

Now let’s focus on the different time frame and understand what could be the possible scenarios.

Hourly Technical: It is near about 60% correction of the last upswing. And because of the recent fall, price is now trading on the lower line of the Bollinger Band. There is a support level on the current closing price. So there can be little pullback on the up side.

Apart from that, 100MA (10857.18 approx.) and 200MA (10851.86 approx.) line are just below the price level. In case price slides further there will be support on that levels.

Let’s look at the indicator side, RSI just above 40 level, Stochastic is below 10, ADX is above 25 and the CCI is below -150.

Overall the sentiment is pretty much on the Bearish side. There is a chance of pullback but in case price crosses its previous swing low, chance of further down side will be high.

 Hourly Chart
(Hourly chart)
Daily Technical: On the daily chart it is a pure rejection pattern. Price tests 11100 mark but the resistance was so strong that crashes approx. 175 points from that peak level.

However, Price retraced back on the upside in between Friday’s trading session but unable to trade higher. So for now sellers are ruling over the market.

On the technical Side, RSI is at 55 level (approx..), Stochastic is below 70, ADX is at 15 level (approx..) and the CCI is below 100.

Overall there is chance for further correction but at 10800 level there will be support and price may retrace back. On the other hand, if the price trade higher 11050 will be its resistance.

 Daily Chart

(Daily chart)


Weekly Technical: The weekly close is still in the consolidated zone and the rejection of the upswing (Daily chart) is the spike of the weekly candle.

If we look closely, previous week same thing happened in the index but that time it was on the opposite side (Buying).

It looks like the Nifty tried give a breakdown as well as a Breakout. But they both did not sustain due to the presence of uncertainty in the market. And as per current market scenario the volatility will be the key player in this market.

Let’s have a look on the indicator side. RSI is above 50, Stochastic is above 70, the ADX is below 15 and the CCI is above 100.

So there is no sign of down side or upside confirmation in the weekly chart. The market still in a phase of consolidation.

Weekly Chart
(Weekly chart)
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Technical Chart

(Technical Chart)


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