Tech View: Bulls are losing grip as Nifty50 forms a ‘Bearish Belt Hold’ on charts

Bears dominated D-Street from the word go on Monday as Nifty failed to defend its crucial psychological support level of 9,150 on Monday and made a bearish reversal pattern known as ‘bearish belt hold’ pattern on the daily candlestick charts.

Bearish belt hold is a bearish reversal pattern in which the day opens at its high level, but then the price falls and closes near its low, not necessarily at the lows of the day. In the exact bearish belt hold pattern, the candle would have a very small lower shadow but no upper shadow.

The Nifty50 which opened with a small gap down at 9,093 levels drifted lower towards its intraday low of 9,024.65. It finally closed at 9,045.20 which made a slightly long lower shadow.

The index is trading in a no trade zone as traders await a decisive move in either direction. The Nifty50 slipped below its crucial 10-days EMA placed at 9,066 and crucial 13-days EMA placed at 9051.

Traders need to be cautious and refrain from creating long positions as a break below 9,000-8,975 could put further pressure on the bulls.

The only positive takeaway from Monday’s session was a bounce back from the low of 9024 which signifies that bulls are not ready to give up. For bulls to reclaim their lost glory on D-Street, Nifty50 must close above 9,075.

“The Nifty50 index formed a Bearish Belt Hold pattern followed by a Doji on last Friday on a daily scale which indicates that bulls are losing their grip. However, it witnessed a small bounce from lower levels,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.com.

“The index has immediate support near to 9,020 and below that, it may see decline towards 8,950 while on the upside needs to hold above 9,075 to witness an up move towards 9,119 and 9,160,” he said.

Following muted trend seen in global markets, Indian market opened lower and selling pressure intensifies as it broke below its crucial level of 13-days EMA which has acted as major support multiple times.

History suggests that Nifty50 has always managed to bounce back from this level in a day or two. If it fails, then it might be looking at levels below 9000 in this week, suggest experts.

“The Nifty50 registered a Bearish Belt Hold kind of formation and in this process, it also breached its crucial supports as it closed below its one-month-old ascending channel with multiple touch points and its 13 Day EMA,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.com.

“This is likely to put the indices under much pressure going forward in next few trading sessions. Hence, it is inevitable for it to stage a comeback in immediate trading session to breathe some life into bulls who are otherwise looking on humble foot,” he said.

Mohammad further added that a threat of trend reversal can be suspected if Nifty50 trades below 8,975 on a closing basis.