Weekly Timeframe: After showing smart upside bounce in last week, Nifty slipped into sharp decline this week and closed the week lower by around 2.58%, as per w-o-w basis.
- A long bear candle has been formed this week, which has erased the gains of last week sharply and closed lower. The positive impact after the formation of hammer pattern during week before last was short lived till last week. This is not a good sign for the market.
- The important support as per the concept of change in polarity (orange dashed line-connecting previous swing highs and lows) has been revisited around 10120-40 levels today and no upside recovery has been emerged from the lows.
- The said support of 10100-140 levels is a strong valuation support and there is a possibility of buying emerging from near the lows. Hence, any slowdown in the downside momentum by next after initial weakness, there is an equal chance of emergence of buying interest from the lows.
- Nifty is nearing another key support of 20 week EMA (green curvy line) around 10050 levels. Nifty has been maintaining above this support since past many months. Hence, this could be another indication to expect some value buying from the lower levels.
- Presently, Nifty is forming a negative sequence of lower tops and bottoms as per weekly timeframe. The new lower top has been formed at 10409 levels during this week and present decline is expected to slide below the last swing low of 10094 of mid of Nov, before forming a new lower bottom of the sequence.
- The underlying near term trend of Nifty is sharply down and one may expect some more weakness during early to mid-part of next week.
- The presence of strong supports and the overall chart pattern is indicating a possibility of Nifty showing further decline down to 10050-10000 levels initially and then the possibility of emergence of value buying from the lows.
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