Tech view: Nifty50 forms ‘bearish belt hold’ pattern on charts; bears take lead

NEW DELHI: The Nifty50 cracked over 80 points on Thursday to close below its crucial 200-day moving average (DMA), thus forming a ‘bearish belt hold’ pattern on the daily candlestick charts.

The Nifty50 came under tremendous selling pressure largely on muted global cues. If the index stays below the 7,780 level on Friday, the selling pressure could intensify, technical experts said.

A ‘bearish belt hold’ is referred to as a trend reversal pattern and it holds more importance if formed after a consolidation.

Traders should remain cautious as the index closed below its crucial 200-DMA placed around the 7,801 mark and had support at 7,820.

In this pattern, the opening price becomes the highest point of the trading day (intraday high), leaving no upper shadow. The index falls throughout the day to close near its intraday low, resulting in a long candle with a short lower shadow.

Throughout the week, the Nifty50 formed indecisive patterns. It formed a ‘hammer’ on Monday, a ‘gravestone doji’ on Tuesday, another ‘hammer’ on Wednesday and a ‘bearish belt hold’ on Thursday.

The trend shows that the market is losing momentum and absence of buying at higher levels has spelt trouble for the bulls and not allowed them to push the market higher throughout this week.

On Thursday, the Nifty50 opened at 7,875.50 and rose marginally to 7,876.20. The index fell throughout the day to hit an intraday low of 7,766.80, resulting in a small lower shadow. It finally closed at 7,783.40.

“Global risk aversion appears to have put pressure on the Indian market as Nifty50 breached the psychologically critical support at 7,800 on a closing basis after forming a bearish belt hold pattern on the Japanese candlestick charts, which suggest clear domination of the bears throughout the session,” Mazhar Mohammad, Chief Strategist - Technical Research & Trading Advisory, Chartviewindia.in, told ETMarkets.com.

“The Nifty50 is likely to witness further selling pressure if it slips and trades consistently below the 7,780 level for at least one hour on Friday. In such a scenario, important support will be available at the 7,753 – 7,738 levels,” he said.



A critical support for Nifty50 is placed around the 7,720 level and a close below this level shall change the trend decisively in favour of the bears, experts warned.

“If the index trades below the 7,820 level for long, the weakness may continue towards the next support at the 50-EMA and the crucial level in 7,720-7,700 zone,” Chandan Taparia, Derivatives Analyst - Equity Research, Anand Rathi Financial Services, told ETMarkets.com.

The Nifty50 closed below its previous lows and ended near its lower range after almost a week. The 7,770-7,750 levels are key supports, which the bulls need to hold on to if they want to be in charge of the ongoing trend, experts said.

"A break below these levels (7,770-7,750) could put the market in trouble and in a deep correction. The candlestick pattern suggests a somewhat bearish engulfing pattern, that too on an event day, which suggests Nifty50 is now in a grip of the bears. On the last trading session of the week, the bears will try to close on a strong note,” Mustafa Nadeem, CEO, Epic Research, told ETMarkets.com.