Tech view: Nifty50 forms Bearish Belt Hold; 10,560 level is key now

NEW DELHI: Nifty50 formed a ‘Bearish Belt Hold’ pattern on the daily chart for the second successive day on Wednesday, reflecting a late recovery in the index after intense selloff earlier in the day.

The index formed a lower high, lower low pattern for the second session and broke the crucial 10,650-10,630 range, as the index respected the 10,600 level at close.

While a couple of near-term oscillators have triggered a sell signal on the daily time frame chart, the rest are still in buy mode, said Arun Kumar, Market Strategist at Reliance Securities.

Kumar expects the index to consolidate for a day or two. The Nifty50 fell 56.15 points, or 0.53 per cent, for the day to close at 10,600.

The index has violated the up-sloping trend line support zone of last four weeks on a closing basis, which indicates a bearish bias ahead, said Rajesh Palviya of Axis Securities.

If the index breaks and sustains below 10,560, it may drift further towards the 10,530-10,480 range, said Palviya.

"We do not have sufficient signals of a trend reversal yet," said Gaurav Ratnaparkhi of Sharekhan, who believes the bulls need to push harder in order to gain control again.

As long as the index supports the 10,600-550 range, there is possibility of an upside bounce in the market in the near term, said Nagaraj Shetti of HDFC Securities.

Mazhar Mohammad of Chartviewindia.in believes traders will be better off avoiding positional longs until Nifty registers a breakout above the 10,775 mark as the upside looks limited at this stage.