US Indices in a weak technical position, Nifty sell signal - what lies ahead?

DJIA has formed a big Bearish Engulfing pattern last Friday and closed near the lower boundary of a 7 day long congestion.

Nasdaq and S&P have formed Big Bearish Engulfing candles on their daily charts after reaching ATHs a day earlier.

The above picture, in itself, does not suggest a sell, but calls for caution ahead. Is this the first sign of capitulation after a relentless rally in the face of a raging war? Looks so if one puts is in the perspective of overall global weakness in financial markets, the fact that US markets are the most overbought in history at this point of time and the global macroeconomic picture in the face of war and looming inflation. Only time can tell.

Meanwhile, the picture for European indices remains equally gloomy with a weak Friday close, however, within range falling short of a full blown sell signal. The sell would trigger if the range gets broken the coming week, a highly likely event.

Meanwhile in Asia, Nikkei and Kospi have already given emphatic sell signals last Friday after reaching an ATH one day earlier while other Asian indices already look weak.

NIFTY gave a sell last Tuesday breaking below a 1-2-3 top. It retraced on the following 3 days to retest the neckline i.e. the breaking point. It closed negative last Friday with a Bearish Harami candle at gap and neckline resistance. This looks like an invitation to sell.

Banknifty has a similar pattern.

Nifty IT, in the meanwhile, has been declining rapidly since early February even though its US counterpart, Nasdaq has been making new ATHs, even until last week. It has given a fresh sell signal last Tuesday, breaking below a H&S pattern in a declining trend.

Looks like the Indian markets are set to accelerate their fall if the sell signal materializes in the US and European markets. Only time can tell.

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