The index is moving in a Lower Top and Lower Bottom formation on the daily chart indicating negative bias - Axis Securities
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Nifty
Nifty opened sharply lower with a downward gap and extended selling momentum in the first half however buying momentum at lower levels recovered some of the earlier losses. Nifty closed at 16302 with a loss of 109 points.
On the daily chart the index has formed a small bullish candle with shadows on either side representing extreme volatility as well as indecisiveness amongst participants regarding the direction. The index is moving in a Lower Top and Lower Bottom formation on the daily chart indicating negative bias. The chart pattern suggests that if Nifty crosses and sustains above 16400 level it would witness buying which would lead the index towards 16500-16700 levels. However if the index breaks below 16200 level it would witness selling which would take the index towards 16100-15900. Nifty is trading below its 20, 50, 100, and 200-day SMA which indicates negative bias in the short to medium term. Nifty continues to remain in a downtrend in the short to medium term, so selling on rallies continues to be our preferred strategy.
The daily strength indicator RSI is moving downwards and is quoting below its reference line indicating negative bias.
The trend deciding level for the day is 16285. If NIFTY trades above this level then we may witness a further rally up to 16425-16545-16685 levels. However, if NIFTY trades below 16285 levels then we may see some profit booking initiating in the market, which may correct up to 16160-16020-15900 levels.
Banknifty
Banknifty opened with a downward gap and traded with extreme volatility on either side. Banknifty closed at 34275 with a loss of 316 points.
On the daily chart the index has formed a small bullish candle with shadows on either side representing extreme volatility as well as indecisiveness amongst participants regarding the direction. The index is moving in a Lower Top and Lower Bottom formation on the daily chart indicating negative bias. The chart pattern suggests that if Banknifty crosses and sustains above 34500 level it would witness buying which would lead the index towards 34800-35100 levels. However if index breaks below 34000 level it would witness selling which would take the index towards 33800-33500. Banknifty is trading below 20, 50, 100 and 200 day SMA indicating negative bias in the short to medium term. Banknifty continues to remain in a downtrend in the short to medium term, so selling on rallies continues to be our preferred strategy.
The daily and weekly strength indicator RSI is moving downwards and is quoting below its reference line indicating negative bias.
The trend deciding level for the day is 34250. If BANK NIFTY trades above this level then we may witness a further rally up to 34575-34880-35205 levels. However, if BANK NIFTY trades below 34250 levels then we may see some profit booking initiating in the market, which may correct up to 33950-33625-33325 levels.
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