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Daily Technical View on Nifty

Market: Observation

* Markets corrected sharply on Friday after a gap down opening. Nifty finally lost 234.4 points or 1.03% to close at 22,519.4. Broad market indices like the BSE Mid Cap and Small Cap indices lost less, thereby outperforming the Sensex/Nifty. Market breadth was negative on the BSE/NSE

Nifty: Short term reversal

* Zooming into 15 min chart, we observe that Nifty moved lower during the session with intermittent bounces. In the process, it broke the support of 22612, thereby reversing the recent short term uptrend. There has also been a negative MA crossover as the 20 period MA has moved below the 50 period MA on the 15 min chart.

* The index is now likely to test the next major support of 22303 in the very near term. Any pullback rallies could find resistance at 22726.

Nifty: In a short term downtrend

* On the daily chart, we can observe that the Nifty was in a healthy short term uptrend after recently bouncing back from the 21700 levels. But Friday’s sell off has reversed this uptrend as the previous swing lows have been broken.

* Technical indicators like the 14-day RSI too is supporting the weakness as it has declined sharply and moved below its 9-day EMA. Nifty could now head towards the next major supports of 22303-22142 in the coming sessions.

* The 22303 level corresponds to the previous swing low and the 22142 level corresponds to the 50 day SMA.

Nifty – Hourly Timeframe chart

Nifty – Daily Timeframe chart

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