A Bearish Engulfing In Nifty 50! What it Implies?

  • Stock Market Analysis
  • Editors Pick

After a good start to the day, the broader market Nifty 50 index witnessed sharp selling pressure from higher levels and ended the session 0.64% lower at 22,055.05. This is not just the first red session in the last seven, but there has been a formation of a big bearish engulfing candlestick pattern on the daily chart.

This pattern when formed at the very top (which is the case here) implies a bearish signal and a probable trend reversal towards the downside. The real body of today’s candle has engulfed the bodies of the past two sessions which is an even more bad signal for the bulls.

Traders might have thought that a new high has finally been made which is a good signal for the trend continuation. This is true until a reversal signal such as an engulfing candle appears on the chart.

Now, conservative traders can wait for one more session. If the index breaks below today’s low of 21,998, then tightening stop loss levels on long positions might be a good idea to protect against further erosion of profits.

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On the other hand, going for short positions could also be a good option from thereon for which the stop loss level will be today’s high, at 22,250 (rounded off).

Now, how long a correction can extend? There is stiff support around 21,600 - 21,550. This level which is still some 500 points away from the CMP can become a good profit booking zone for short positions.

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  • umesh chandra @umesh chandra
    your idea isworthless
    Like 1
  • Mohan Achuthan @Mohan Achuthan
    top is 1000 Point nifty
    Like 0
  • NIRAV JARIWALA @NIRAV JARIWALA
    BUY 22 FEB  NIFTY 21900 CALL BUY ABOVE """" 127.4  """ TARGET   175   /   200 UP INTRADAY
    Like 3
  • NIRAV JARIWALA @NIRAV JARIWALA
    BUY NIFTY FUTURE 21986 TARGET 22186 INTRADAY
    Like 2
  • San Ram @San Ram
    After 6 days of a relentless rally, it's normal to see a profit booking. Corrections will always be sharp in a bull market. It was just about 45 minutes of downfall. As long as Nifty is above 21840-21880, the bullish trend is intact and these engulfing patterns don't matter as the recovery will also be sharp.
    Like 1
  • Business outlook @Business outlook
    Yes, Bearish Engulf pattern on the chart but until NIFTY is above 20 DMA 21800, unless it broken, still chance for upmove
    Like 1
  • Devbroto Talukder @Devbroto Talukder
    Nifty small cap already warned 1 week ago..... enjoy the Bears 🐻 market
    Like 1
  • Monika Kalra @Monika Kalra
    no body knows what will happen tmrw.... sudden profit booking
    Like 1
  • Eku Vri @Eku Vri
    nifty mid select may hit worse than nifty where we can see bearish engulfing also.
    Like 1
  • Dharamvir Yadav @Dharamvir Yadav
    top is over now 1000 points may down NIFTY
    Like 1
  • Suhas Gedam @Suhas Gedam
    Technical is not working now days… till yesterday people are supebullish.. today bearish 😃
    Like 5
  • Rajesh Bala @Rajesh Bala
    Is this because of the Fed meeting today?
    Like 1
    • Rajesh Bala @Rajesh Bala
      Why isn't Mr Ayush Kanna replying
      Like 0
    • Aayush Khanna @Aayush Khanna
      Reasons are irrelevant in technicals.
      Like 1
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