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Below is the Views On Market Wrap-up by Mr. Ruchit Jain (Equity Technical Analyst, Angel Broking).
“The Asian markets were trading weak in morning which led to a gap down opening for Nifty in today’s session. The index corrected sharply during the day and breached the support of 11990 which then resulted in further sell off and Nifty recorded a low of 11908. However, just when things looked gloomy, the bulls came back with a vengeance in the last hour of the trade and trimmed majority of the day’s losses to end with a cut of just about 50 points.
The last hour pullback in the Nifty has led to formation of a ‘Bullish Hammer’ pattern on the daily chart. This reversal pattern if formed after a correction usually leads to an up move in short term. Also, this pattern is formed post testing the 50% retracement support of the recent up move in Nifty from 11615 to 12247. Hence, the follow up move in tomorrow’s session will be crucial to watch and if the index manages to surpass today’s gap resistance of 12037, then we could see a resumption of the positive momentum towards 12130 and beyond. Since the higher degree trend is positive, we continue with our advice to look for buying opportunities and avoid taking contra trades. On the flipside, today’s low of 11908 will now be seen as a sacrosanct support for the near term.
From a trading perspective, stocks which have seen some correction in last few sessions post the recent outperformance could again see momentum if the index surpasses the above mentioned resistance. The ‘Midcap50’ index too has formed a reversal pattern and hence one should keep a focus on opportunities from this space. ”
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