Huh?

There's an existing chandelier.

You are replacing it with a recessed light?!?

What is the 'new chandelier' that you mention?

The wires are connected at the open location

What does that mean?!?

The old chandelier was taken out. This is the hole with the wires connected now through to the new location of the chandelier. We would like to put a downlight in that hole.... and connect the wires to it and then allow the wires to connect to the moved chandelier location. Will this work...?

This is the hole with the wires connected

It's just a hole? Isn't there a box? What was the old chandelier attached to? Or did you remove that box too?

Yes there is a box in that current hole. The new chandelier is working from the new location. He wired the chandelier to the wires that came to the box where the hole is. There are wire caps around each connection in the hole (2 total). Sorry that I am not explaining this well.

Because you cannot cover up a junction box with drywall, and a blank plate looks tacky in the ceiling, you want to put in a 4" remodel can and use its junction box for the splices that are there. Yes, this is usually acceptable. Make sure that the fixture is IC rated if the ceiling is insulated. Make sure the recessed fixture is "Junction boxes rated for applicable through-branch circuit wiring", or something to that effect. If the junction box is in the (accessible) attic, then you could turn the box over and put a cover on it that is removable from the attic, and patch the drywall.

"There are wire caps around each connection in the hole (2 total)."

Should be 3. Where is the ground wire? Is this in conduit?

250.130 Equipment Grounding Conductor Connections. Equipment grounding conductor connections at the source of separately derived systems shall be made in accordance with 250.30(A)(1). Equipment grounding conductor connections at service equipment shall be made as indicated in 250.130(A) or (B). For replacement of non– grounding-type receptacles with grounding-type receptacles and for branch-circuit extensions only in existing installations that do not have an equipment grounding conductor in the branch circuit, connections shall be permitted as indicated in 250.130(C).

(C) Nongrounding Receptacle Replacement or Branch Circuit Extensions. The equipment grounding conductor of a grounding-type receptacle or a branch-circuit extension shall be permitted to be connected to any of the following:

(1) Any accessible point on the grounding electrode system as described in 250.50

(2) Any accessible point on the grounding electrode conductor

(3) The equipment grounding terminal bar within the enclosure where the branch circuit for the receptacle or branch circuit originates

(4) For grounded systems, the grounded service conductor within the service equipment enclosure

(5) For ungrounded systems, the grounding terminal bar within the service equipment enclosure

You are right. There are three. One was hidden behind the other... I will check the amps to see if the line can handle the chandelier and a can light.