Nifty: Last week, significant volatility was seen in Indian market as index nosedived sharply on the back of sharp sell-off in the global indices. In that pessimism, Nifty tumbled below 10300 levels. Subsequently, we saw decent pullback however such move proved to be short-lived and index resume its down trend on Friday. As a result, index shaved off another 2.84% over its previous week close.
- During this fall, index found support near 78.6% retracement of its previous daily swing move. On a contrarian side, Nifty constantly found supply near daily 45-EMA.
- The weekly bearish engulfing pattern mentioned in our previous update got activated and the said pattern confirmed with a gap which enhanced the bearish signal.
- On a daily chart, index formed a two period bullish divergence hence possibility of minor bounce even from current level can’t be ruled out.
- On a contrarian side, the weekly Higher Top Higher Bottom formation is still intact as long as Nifty is holding above 10033.
- Going forward, the last week low of 10276.30 will act as a near term support and any break below this level will drag index lower towards the strong support of 10033 which coincided with the previous weekly swing low. On the other side, 10640 will act as an immediate resistance whereas the Monday’s gap area of 10703 – 10736 will act as a strong hurdle.
Banknifty: Last week, Nifty Bank opened lower with a gap but somehow it managed to hold 26000 levels. However, Tuesday’s session proved to be nightmare for bulls as Nifty Bank opened lower with a massive gap. Once again, the recovery from lower levels helped index to trimmed major part of its losses. Subsequently, index made a valiant attempt to rally higher however sustain selling pressure near 26000 marks led to another round of sell-off. In the process, index concluded the session with a loss of 3.73%
- The weekly bearish engulfing pattern mentioned in our previous update got activated and similar to nifty index said pattern activated with a formation of gap.
- On a daily chart, index closed below daily 89-EMA. On a contrarian side, the daily RSI (14) along with the short term momentum indicators are signaling an oversold condition.
- At this juncture, the recent low of 25023 which coincided with the monthly 9-EMA will act as an immediate support below which the strong support placed near 24617 as this level coincides with the weekly swing low and the PR trend line drawn by joining the bottoms of June 30, 2017 & September 28, 2017.
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- Any sustain closing below 24617 will confirm the medium term down trend. On the other side, multiple resistances placed near 26100 – 26364 zone which coincides with the daily 45-EMA, the daily gap area formed on last Monday
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