NEW DELHI: The Nifty50 hit a two-year low in an eventful session on Friday and form a Three Black Crows pattern on the daily chart, which suggests the market is not done with the correction yet.On the weekly scale, the index formed a bearish candle for the fifth week in a row.
It has been making lower highs and lower lows all this while, and has lost some 1,500-odd points during this period.Bearish candles on the daily and weekly scales suggested the bears were holding a tight grip on the market, said Chandan Taparia of Motilal Oswal Securities.
It has formed a Three Black Crows pattern on the daily scale, as the bears are riding the decline.
Nifty has seen the lowest weekly close in last 26 weeks.
As long as it holds below 10,500, the weakness may continue and take Nifty towards 10,200, he said.The downside gap in opening trade in last two sessions remains intact, said Nagaraj Shetti Technical Research Analyst at HDFC Securities.
As per the gap theory, this pattern indicates a bearish runaway gap, which could mean the declining trend could continue for some more time, he said.
A long negative candle has been formed on Niftys weekly timeframe chart, which signals a faster downward retracement (retracement of 9 weeks decline in five weeks).
This is negative indication, Shetti said.On the weekly chart, it was the fifth consecutive bear candle for Nifty50 in a row, which suggests the market may be stretching more on the downside and, thus, can attract trigger a relief rally going forward.In case of a pullback attempt, the initial hurdle can be expected around the 10,550 mark, said Mazhar Mohammad of Chartviewindia.in.
If the bulls manage to close above the said level, the relief rally can extend Up to 10,850 level, he said.