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Daily Technical View on Nifty

Selling climax near the important support..

Observation: After a decisive downside movement in the last four sessions, Nifty witnessed 'bloodbath' on Monday and closed the day sharply lower by 468 points

An exceptional long negative candle was formed on the daily chart with minor lower shadow (with in a high low range of 600 points). Technically, this pattern indicates a selling climax in the market and this reflect ongoing sharp downside momentum in the market.

The crucial lower support of 17600-17500 levels have been broken decisively on the downside and Nifty closed below it. The Monday's decline has moved below the 61.8% retracement support of 17150 levels. The Fibonacci retracement is taken from the bottom of 16410 to top of 18350 levels. This is negative indication and this confirmed that the present decline seems to be a sharp reversal on the downside than retracement of a previous upmove

Nifty is now nearing an important weekly support of around 16900 levels (Intermediate trend line connected from previous swing highs, as per the concept of change in polarity-weekly chart). Previously, the downside breakout attempt of this trend line support has failed and the market witnessed sharp upside bounce from the lows in Dec month

Conclusion: The near term trend of Nifty is sharply down. The placement of important support and a formation of selling climax type candle pattern at the lows on Monday could be hinting at a possibility of bottom reversal in Nifty around the crucial support of 16900-16800 levels in the next few sessions. Confirmation of bottom reversal could open a quantum of an upside bounce from the lows.

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