Nifty has given an engulfing candle on the weekly charts. This pattern involves two candles with the latter candle ‘engulfing’ the entire body of the candle before it.
Engulfing candles tend to signal a reversal of the current trend in the market. Refer to the chart below – previous instances of engulfing candles are marked with the arrows. Notice how it helped pick the tops in 2020 Jan and earlier in 2018 August.
Next couple of weeks it would pay to be cautious – keep the stops tight on your longs. We may just be in for a bear phase ahead.