The market snapped its six-day winning streak and fell sharply amid reports of India-China border tensions on August 31. Selling was seen across sectors with bank, automobile, metal and pharmaceuticals falling 3-5 percent.
The Sensex corrected 839.02 points, or 2.13 percent, to 38,628.29, and the Nifty plunged 260.1 points, or 2.23 percent, to 11,387.5. It formed a large bearish candle, which resembles a Long Black Day kind of pattern on the daily charts and engulfed the high-low range of the last six sessions.
"This pattern could be considered as a Bearish Engulfing pattern. Hence, formation of such pattern at the new swing highs and near the hurdle could be considered as an important reversal pattern. We need follow through weakness in the subsequent session to confirm the reversal pattern," Nagaraj Shetti, Technical Research Analyst at HDFC Securities, told Moneycontrol.
"The short term trend of Nifty seems to have reversed. We expect sell on rise opportunity on any upside bounce back attempt around 11,450-11,500 levels. One may expect further weakness in the short term and the next lower levels to be watched at 11,100-11,000," he said.