Tech view: Nifty50 forms ‘Doji’ on tech charts; profit booking ahead

NEW DELHI: The Nifty50 closed a lacklustre day flat but with a positive bias on Thursday, forming a ‘Doji Cross’ on the daily candlestick charts. This signalled indecisiveness among the bulls and the bears.

‘Doji’ is a neutral pattern and does not give any hint about future market trend, but it signals indecisiveness among the bulls and the bears. A ‘Doji’ pattern looks like a cross or a plus sign. It is formed when the open and the close prices of a stock are virtually the same.

The candlestick patterns pointed to further selling pressure or profit booking ahead, and it could come over the next few sessions. Market experts advised traders to remain cautious over the next few sessions. For the upward trend to continue, the market has to surpass the 8,350 level convincingly, they said.

The Nifty opened at 8,342 and closed at 8,337, which resulted in a cross or a plus sign on the charts. The index rose to an intraday high of 8,361 and a low of 8,317 in intra-day trade.

“It was a day of consolidation with a positive bias on the bourses, as Nifty50 formed a ‘Doji’ cross kind of pattern. Sell signals on the lower time frame charts suggest caution without much upside,” Mazhar Mohammad, Chief Strategist - Technical Research & Trading Advisory, Chartviewindia.in, told ETMarkets.com.



The market witnessed a bout of volatility on Thursday with the Nifty50 swinging about quarter per cent on either sides. “Sessions like this occur when a lot of intraday traders get caught on the wrong side of the trade. The price action translates into a candlestick pattern called Doji,” Karthik Rangappa, VP, Educational Services, Zerodha, told ETMarkets.com.

“A ‘Doji’ is formed when the opening and closing levels of the day are close to each other. The Doji formed on Thursday along with the previous bearish candle suggests there could be strong selloff on Friday,” he said.

Important levels to watch: The Nifty50 is trading near its key resistance level of 8,350 and a close above this level will give strength to the bulls. A close below 8,285-8,332 levels shall confirm more weakness for Nifty50.

The momentum oscillators we closely track are in the sell mode. The trend forecasting technique, which has a higher probability of catching the short-term turning points, generated a ‘sell’ signal in Thursday’s session, experts said.

“Usually, a Doji candle between a trading range means that the bulls and the bears are fighting hard to get a hold on the market, but there has not been any result. It negated the positive trend of the market making higher highs and higher lows and started forming lower highs and lower lows,” Chandan Taparia, Derivatives Analyst - Equity Research, Anand Rathi Financial Services, told ETMarkets.com.

“Now the index has to cross and hold above the 8,350-8,360 zone to start a fresh upward move towards the 8,420 and 8,450 levels, while holding below the 8,285 level may result in a decline due to profit booking towards the next supports at 8,242 and 8,220 levels,” he said.