Nifty formed a bearish engulfing on 14th February. There was a slight price uptrend from 5th February. On 14th February, the bearish candle completely engulfed the previous day’s green candle which indicates a trend reversal. Though the volume on 14th Feb is not very high when compared to the rest of the days of the week. So, there need to be a cautious approach.
We should take a short position at 10450 as that is the lowest price the nifty went while on the engulfing day. The stop loss should be the highest price on the engulfing day, which is 10599. The risk is Rs.149 (10599-10450). So, the target price should be 10305 (10450-149).
