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Tech view: Nowhere to go! Nifty50 makes Doji pattern on daily charts

Tech view: Nowhere to go! Nifty50 makes Doji pattern on daily charts
NEW DELHI: The Nifty50 consolidated in a narrow range on the last day of the trading week on Friday and formed a Doji pattern on the daily candlestick charts, which suggests further consolidation.
The tussle between the bulls and the bears clearly suggests that the ongoing consolidation in the market is going to continue for some more time. Investors should remain cautious as the Nifty50 is still trading well below its crucial support level at 7,580.
'Doji' is formed when the the index opens and closes approximately around the same level, but remain volatile throughout the day, which is indicated by its long shadow on either side. In the process, it forms a cross or a plus sign.
The Nifty50 opened at 7,542.35 and closed virtually at the same level at 7,555.20, thus forming a Doji pattern. It rose to an intraday high of 7,569.35, making an upper shadow, and fell to an intraday low of 7,526.70 making a lower shadow.
his is a neutral chart pattern and, hence, should not be studied in isolation. Traders should take a call on how the index behaves over the next few sessions. This narrow trading range resulted in the short candle body, which suggests consolidation.
"As the real body inside Friday's trading range is very small with a marginal difference between the opening and closing prices, we can categorise this as indecisive pattern, as it resembles a Doji on the Japanese Candlestick charts," Mazhar ..
Most technical experts are closely watching the 7,550 and 7,540 levels, which the market managed to respect in Friday's sessions. However, if the index breaches this level on Monday, further downside cannot be ruled out.
It looks like the market has entered the short-term corrective phase, which will take some time to reverse. Traders should wait for fresh long positions while aggressive traders can go short keeping stop losses at previous week highs, experts said.
"I would become slightly bearish if we break below 7,550-7,540 levels. The technical level, which are important to watch on the intraday charts, or the pivot levels would be around 7,460 and in the worst case scenario at 7,380," Mitesh Thacker, Technical Analyst, miteshthacker.com said in an interview with ET Now.

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