Index trend and stocks in action January 07, 2020
A common saying in market is that ‘the markets take the stairs up and the elevator down.’ That’s what we had witnessed on Monday. Nifty slid from a 20-day high to a 20-day low in span of just two trading sessions. The benchmark index recorded a decline of almost 1.91 per cent and closed below the 12,000 mark.
The price action of the day formed a sizable bear candle with a gap down opening. In the last write up, we mentioned of a rising wedge pattern and that Nifty had seen a breakdown of this pattern on Monday. Also, during this course, it gave up its 21 and 50-DMA and retraced more than 61.8 per cent of the rise from December 11, 2019.
The index has also breached its 175 points range on the downside and now it has entered into the previous consolidation range. Technically, the picture has changed on short-term charts after the formation of a sizable bearish candle near the high. Now going ahead, Monday’s session low of 11,974 is a crucial support level and breaching this support would open gates for further correction towards level of 11,840-11,800 in the short-term.
The daily MACD is bearish, as its trades below its signal line. Meanwhile, the 14 period RSI has reached 44 level and it is nearing important support level of 40.
All-in-all, the level of 11,974 is the key level to watch out for traders and the breaching of this level would result into the test of 11,840-11,800 mark.
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