NEW DELHI: The Nifty50 on Wednesday saw selling pressure at immediate resistance level of 11,080, and eventually closed below the 11,000 mark.
In the process, the index formed a large bearish candle, resembling Dark Cloud Cover on the daily chart.
The index may be bracing for 'Double Top' formation, which does not auger well for the bulls.
A long bear candle is signalling a counterattack by the bears at the highs, said Nagaraj Shetti of HDFC Securities, who said Wednesdays price movement signified presence of a key hurdle at 11,080 and 11,000 levels.For the day, the index fell 27.60 points, or 0.25 per cent, to 10,980.
This was the sixth session when the Nifty50 consolidated in the 10,920-11,080 range.
A breakout on either side of the range will give direction to the market, said Rajesh Palviya of Axis Securities.The index is well placed above its 20-day and 50-day SMAs, but RSI has turned flat, indicating lack of strength.
Momentum indicator Stochastic remains in bearish mode."The index has formed a Dark Cloud Cover pattern as the bears are pushing it from the higher zone.
If the index holds above 10,950, a positive-to-rangebound move could be seen towards 11,080 level.
But a fall below 10,929 could confirm a short-term 'Double Top' formation for a potential decline towards 10,888 and 10,835 levels, said Chandan Taparia of Motilal Oswal Securities.
Mazhar Mohammad said the Nifty50 seemed to be carving out a fresh trading range between 11,078 and 10,925 levels in last five sessions and, therefore, it would be critical for the index to hold above the 10,925 level, failing which it may see fresh selling, with targets close to 10,760 level."For the time being, the upsides for the index remain capped around the 11,078 level.
Traders are advised to adopt a neutral stance as the Nifty50 may remain choppy and directionless next session, the expert said.