NEW DELHI: The Nifty50 saw strong selling pressure on Thursday as it closed below its crucial support at 100-day moving average.
The 50-pack formed a large bearish candle on daily chart with higher trading volumes.
Analy sts said a big correction could be in offing should index fails to respect its support in 10,670-620 range.
Thursdays correction intensified as Nifty broke 10,735 level on Wednesday.
In process, index went on to retrace its recent upward move by 61.8 per cent.
The index now trades around upward sloping trend line in vicinity of 61.8 per cent and 100 per cent retracement levels at 10,670 and 10,620, respectively, said Sameet Chavan of Angel Broking.
Chavan said these are make or break levels for index and, thus, Fridays session would be crucial in dictating markets near-term direction.For day, index dropped 120.25 points, or 1.11 per cent, to 10,672.Recently, Nifty turned south from upper end of a crucial range at 10,920, also being 100-DMA.
It closed below its 200-DMA placed at 10,780 and is now approaching 50-DMA.
A move below 10,670 mark will drag it lower to 10,450 level in coming sessions, while a trade above its 200-DMA i.e.
10,780, will trigger a short-covering rally to 10,920 level, said Aditya Agarwala, Technical Analyst at YES Securities.Daily indicators are placed negatively, supporting weakening sentiment, said Rajesh Palviya, Head of Technical Derivatives Analyst, Axis Securities, who believes a move above 10,680-10,700 range could trigger a pullback rally towards 10,750 10,780 levels.
A long bear candle appeared on Thursday after formation of a new lower top at 10,923 on January 1.
Niftys short-term trend looks weak, and next support to watch will be at 10,535 level, said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.