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Daily Technical View on Nifty

Market: Observation

* Carrying on from last Friday, markets corrected further on Monday after a gap down opening. Selling was seen through the day. The Nifty finally lost 267.75 points or 1.51% to close at 17,490.7. Broad market indices like the BSE Mid Cap index lost more, thereby under performing the Sensex/Nifty. Market breadth was negative on the BSE/NSE.

Nifty: In a short term down trend

* Zooming into 15 minute chart, we see Nifty opened with a down gap and corrected further during the day. The index remains in a short term downtrend after breaking the recent support of 17852 as it continues to make lower tops and lowerbottoms on the 15 min charts.

* The 20 period MA also remains below the 50 period MA, indicating the negative MA crossover is intact. These MAs have also not flattened yet indicating the short term downtrend is not yet matured and there ismore downside potential.

Nifty:Daily chart shows index couldfall further

* On Daily chart, we observe that Nifty has corrected sharply in last two sessions after breaking out of a downward sloping trend line that held down the highs of 2021 and 2022. This suggests a false breakout.

* With Nifty breaking near term supports and reversing the recent short term uptrend, the index could now fall further towards 20 day SMA at 17340. A failure to hold above 20 day SMA could lead to furtherweakness.

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