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Nifty

On its daily scale; occurrence of multiple reversal patterns viz. ‘Inverse Hammer’ followed by an ‘Engulfing Bullish’ candlestick formation near its 200 DEMA support zone is a good sign for a quick reversal.Yesterday’s price actiontoosawaretest of this support zone & closed above the same despite of the continued weakness which persisted sincethebeginningof the day. This is again a good sign of sustenance of support. Its trend strength indicators have been divergingasitsdailyRSI saw a rebound from its oversold zone while ADX is still falling along with its declining -DI which is a signof lackof conviction. Derivative data indicates strong support at 16700 while sustenance above 17000 could unlock a strongunwinding move towards 17500 which retains the highest CE OI built-up as of now. Data looks more supportiveforretaininglong positions with an expectation of a move towards 17500 during the week.Technically, since the index managedtoholditself above its 200 DEMA of 16880 as well as regaining strength to close the day above its 5 DEMA zone openedthepossibility of a quick swing reversal towards its 20 DEMA support zone placed around 17365. Further longs couldbeconsidered with a stop below 16780.

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