Weekly Timeframe: After showing up move in the last couple of weeks, Nifty slipped into decline during this week and closed the week lower by around 1.25%, as per w-o-w basis.
- A negative candlestick pattern has been formed this week at the all-time high of around 10,490 levels. This is signaling a reversal of the last five weeks upside rally. We need confirmation in terms of follow-through weakness for next week to confirm this as a downward reversal pattern.
- The resistance of long term trend line (green dashed ascending trend line) has been violated as false upside breakout during this week. As Nifty was not able to sustain above that hurdle during this week, after piercing above it in last week.
- Previous such false upside breakout has resulted in a sharp negative reversal in the market (marked in X). Hence, the beginning of weakness of this week from near that hurdle of 10,500 levels is likely to extend for next week, as per the significance of that trend line.
- We observe a formation of negative divergence pattern in Nifty/RSI and this negative divergence seems to have confirmed this week with the down tick in the RSI and in Nifty. This is indicating tiredness in the upside momentum of in Nifty at the higher levels.
- The slowing of downside momentum in the market is still not leading to comeback of bulls from the lows. Any attempt of side bounce is unlikely to hold for next week and Nifty could witness selling pressure on every rise.
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- The downside levels to be watched is around 10,180-150 levels, which could be achieved by next week. Any intraweek upside bounce up to 10,400 levels could be an opportunity to sell on rise for next week.