Nifty 50 Makes Doji Candle; First Sign of Reversal!

  • Stock Market Analysis
Aayush Khanna - Investing.com

After a sharp decline from the all-time high of 20,222.45, the benchmark Nifty 50 index is finally showing a sign of stability. In yesterday’s session, the index formed a Doji Candlestick pattern on the daily time frame which is considered to be a sign of indecisiveness among market participants.

This indecision is good when the market falls or rises steeply in a very short span of time and generally depicts a probable reversal. Hence this pattern should not be ignored at the top or bottom.

Image Description: Daily chart of Nifty 50

Image Source: Investing.com

After 4 straight sessions of fall, Nifty 50 finally got stable on Monday and closed flat forming a Doji pattern. The ideal way to trade this reversal cue is to wait for the market to break the high of the Doji pattern, which in this case is 19,734. As soon as the market crosses above this level, a long position can probably become more apt than a short one.

As there had been a sharp decline from the top, the upside potential of this reversal move is also high. There is a gap being left on the daily chart after a gap-down opening on 20 September 2023. If the market were to close this gap, that would translate into a rally till 20,115 which seems too aggressive for now.

There is another small gap of 30 points which will be filled once the index rallies to 19,878 which looks more realistic target for long positions. The downside risk is limited to 70-odd points as a slide below the Doji’s low of 19,601 will likely extend the downtrend.

In case you want to connect with me, reach out on X (formerly, Twitter). My handle is - aayushxkhanna

Disclosure: I have multiple positions in Nifty 50.

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  • NIRAJ KUMAR MISHRA @NIRAJ KUMAR MISHRA
    Sir, which trading app should I use from India?
    Like 0
  • Anita Keshri @Anita Keshri
    excellent information
    Like 3
    • Aayush Khanna @Aayush Khanna
      Thanks, Anita.
      Like 0

      • Comment Guidelines

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      • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
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  • ps narayanan @ps narayanan
    by 6th oct mkt will see new high
    Like 0
  • Chadra Kanth @Chadra Kanth
    sir i have ce positions will i wait or exit ?
    Like 2
  • rajesh giroti @rajesh giroti
    wonderful analysis..
    Like 1
  • Poornima Samantaray @Poornima Samantaray
    which stocks are for intraday today
    Like 0
  • Poornima Samantaray @Poornima Samantaray
    informative
    Like 0
  • amit bisht @amit bisht
    no one is buying either, dont buy its not the time
    Like 1
  • ravi jadav @ravi jadav
    due to global pressure nifty will fall
    Like 1
  • namami ghosh @namami ghosh
    excellent insights 🙏👍
    Like 1
    • Aayush Khanna @Aayush Khanna
      Thanks, Namami.
      Like 2

      • Comment Guidelines

      We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

      • Enrich the conversation
      • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
      • Be respectful. Even negative opinions can be framed positively and diplomatically.
      •  Use standard writing style. Include punctuation and upper and lower cases.
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  • Manoj Gaharwar @Manoj Gaharwar
    PE hold karu k ni
    Like 2
  • Ashima Anand @Ashima Anand
    ♥️
    Like 0
  • Hanamanth Kabadi @Hanamanth Kabadi
    will Adani lead the next rally ? 🐂😉
    Like 0
  • Sanjay Singhdeo @Sanjay Singhdeo
    Pe wale trap honge aj
    Like 4
  • Rishi Mishra @Rishi Mishra
    🏆🏆
    Like 0
  • Chandrashekhar Bagora @Chandrashekhar Bagora
    you are genius sir
    Like 3

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