Nifty strong sell signal - What lies ahead?

Nifty gave a strong sell signal last Tuesday on the daily chart - a Bearish Engulfing candle on the next day after a breakout. A typical buy failure that traps the bulls on the wrong side and can go in the opposite direction big and fast.

The result manifested itself last Friday with Wednesday being a narrow range day and Thursday being a market holiday. The price fell violently in the last 30 minutes of trade to make a big red candle that closed near its low and in the middle of the preceding range. The implications are bearish, more so because it being the last session of a Friday, which more often than not, carries forward to a Monday morning.

The price is likely to retest the bottom of the range and extend further to close the massive overnight gap from 8th of April.

Almost all the other sectoral indices including Banknifty, IT, Midcap and Smallcap have generated strong sell signals last Friday.

While the market has spoken, only time can tell what happens next.

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