Tech view: Nifty forms ‘Doji’ ahead of US presidential election outcome

NEW DELHI: The Nifty50 ended a volatile day above its crucial resistance level of 8,500 and slightly above its opening level of 8,543 on Tuesday just ahead of the outcome of the US presidential election. In the process, the index formed a ‘Doji’ pattern on the daily candlestick charts.

The pattern does not hold much importance as Wednesday could be a trend-setting day on either side even as the world awaits the outcome of the US presidential.

A 'Doji' is formed when the index opens and closes around the same level but remains volatile throughout the day, which is indicated by its long shadow on either side. It appears like a cross or a plus sign.

The Nifty50 opened at 8,540 and closed virtually at the same level at 8,543, thus forming a ‘Doji’ kind of pattern on Tuesday. The index rose to an intraday high of 8,559, forming a small upper shadow, and fell to an intraday low of 8,480, which resulted in a long lower shadow.

As per theory, ‘Doji’ chart patterns are commonly seen during a consolidation phase and can help analysts identify potential price breakouts or breakdowns.

Although ‘Doji’ is a neutral chart pattern and often signals indecisiveness among the bulls as well as the bears, it could be a precursor to a corrective or consolidation phase for a couple of sessions unless the Nifty50 decisively closes above the 8,600 and 8,650 levels, experts said.

“The bulls appear to have chosen to go for the event on a positive note, as the Nifty50 staged a smart recovery from the day’s low of 8,480 before signing off the session with an indecisive Doji kind of formation," Mazhar Mohammad, Chief Strategist - Technical Research & Trading Advisory, Chartviewindia.in, told ETMarkets.com.

However, the market direction in the immediate term shall be dictated by the outcome of the election and hence wild swings can be expected in the near term. Technically speaking, the market needs to fill and close above the gap zone between 8,614 and 8,549 levels formed on November 2.

On a favourable election outcome, the market may witness a huge gap-up opening on Wednesday without giving any opportunity to traders. But once the gets settles, the market will prefer to move in the direction of prevailing larger trends, which are down as of now, experts said.

“We recommend traders/investors not to jump in and buy into gap-up opening immediately, but advise them to wait for a close above the 8,600 level before initiating fresh longs,” said Mohammad. Such a close shall technically tilt the balance in favour of the bulls.

Contrary to this, a negative outcome where Donald Trump wins the US presidential election will further strengthen the bearish sentiment and may force the Nifty50 to test its 200-day DMA placed around the 8,324 level.




The Nifty50 failed to surpass the immediate hurdle at the 8,550 level, but closed slightly above the opening level. It witnessed strong buying at lower levels in the second half of the session and closed with the gain of around 50 points.

“The Nifty50 formed a ‘Bullish Dragon Fly Doji’ on the daily chart, as it formed a bigger lower shadow and closed near the opening level,” Chandan Taparia, Derivatives & Technical Analyst - Equity Research at Anand Rathi Financial Services, told ETmarkets.com.

“Usually, a ‘Bullish Dragonfly Doji’ is a strong reversal candle, if followup happens over the next session, but one needs to be cautious ahead of the US presidential election as sentiment would work more than the price pattern,” he said.

Now, the Nifty50 has to hold above the 8,550 level to attract fresh buying interest at 8,665 and 8,720 levels.