NSEI breaks below key technical support level
NIFTY 50 Index (NSEI) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, NSEI ended the month 7.49% higher at 11073.45 after edging lower INR28.70 (-0.26%) today. Closing below Thursday's low at 11084.95, the stock index confirmed its breakout through the previous session low after trading up to INR58.30 below it intraday.
Daily Candlestick Chart (NSEI as at Jul 31, 2020):
Friday's trading range has been INR123.75 (1.11%), that's below the last trading month's daily average range of INR149.23. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for NSEI.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 11087.85 (now R1), which is likely to act as resistance going forward. The last time this happened on Wednesday, NSEI lost -0.90% on the following trading day.
While still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "3 Consecutive Lower Closes" stand out. Its common bearish interpretation has been confirmed for NIFTY 50. Out of 141 times, NSEI closed lower 51.06% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 48.94% with an average market move of 0.03%.