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Daily Technical View on Nifty

Market: Observation

* Markets bounced back on Monday after a negative morning session. Nifty finally gained 48.85 points or 0.22% to close at 22,104.05. Broad market indices like the BSE Mid Cap index gained more, thereby outperforming the Sensex/Nifty. Market breadth was negative on the BSE/NSE.

Nifty: Near term downtrend could reverse

* Zooming into 15 min chart, we observe that Nifty is still in a short term downtrend as it is still making lower tops and lower bottoms for the last 7 sessions.

* The moving averages too confirm this as the 20 period SMA is below the 50 period SMA on the 15 min chart.

* The healthy bounce back from the lows of Monday however indicates that bulls are not giving up easily and the current downtrend could soon reverse.

Nifty: Short term downtrend could reverse

* On the daily chart, we can observe that the Nifty has bounced back from a low of 21821 and is now holding above the trend line support connecting the swing lows of the last three months.

* The 14-day RSI too has bounced back from oversold levels which is encouraging.

* Traders will need to watch if the Nifty can now gradually move higher and take out the previous swing highs of 22308-22369 to reverse the current downtrend.

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