NSEI tanks, losing INR290.70 (-2.43%) within a single day
NIFTY 50 Index (NSEI) Technical Analysis Report for Oct 15, 2020 | by Techniquant Editorial Team
NSEI ended Thursday at 11680.35 tanking INR290.70 (-2.43%). This is the biggest single-day loss in over three weeks. The bears were in full control today, moving the market lower throughout the whole session. Closing below Wednesday's low at 11822.15, NIFTY 50 confirmed its breakout through the previous session low after trading up to INR160.85 below it intraday.
Daily Candlestick Chart (NSEI as at Oct 15, 2020):
Thursday's trading range has been INR364.15 (3.03%), that's far above the last trading month's daily average range of INR165.60. Things look different on the weekly timeframe, where the market's trading range of the last week has been below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for NSEI.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bearish Outside Bar. Notwithstanding a strong opening the index closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 11794.25 (now R1), which is likely to act as resistance going forward. The last time this happened on September 24th, NSEI actually gained 2.26% on the following trading day. After having been unable to move above 11997.20 in the previous session, the stock index ran into sellers again around the same price level today, missing to move higher than 12025.45.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Strong Down Move" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for NIFTY 50. Out of 198 times, NSEI closed higher 50.51% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 60.10% with an average market move of 0.28%.