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Daily Technical View on Nifty

Market: Observation

* Markets corrected sharply on Thursday after a negative opening. Selling was seen through the day with the Nifty finally losing 345 points or 1.55% to close at 21,957.5. Broad market indices like the BSE Mid Cap and Small Cap indices lost more, thereby underperforming the Sensex/Nifty. Market breadth was negative on the BSE/NSE.

Nifty: In a downtrend

* Zooming into 15 min chart, we observe that Nifty is continuously making lower tops and lower bottoms for the last 5 sessions and is in a downtrend.

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

Nifty: Short term uptrend has reversed

* On the daily chart, we can observe that the Nifty has recently bounced back from a low of 21777 which also roughly coincides with a trend line support connecting the swing lows of the last two months.

* But this uptrend has reversed as the Nifty has corrected for the last 5 sessions and broken its previous swing lows of 22305 in the process.

* The index has also moved below the 50 day SMA and the 14-day RSI is in decline mode.

* Nifty could now test the next important supports of 21860-21777 in the near term. Any pullback rallies could find resistances at 22180-22308.

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