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Daily Technical View on Nifty

Sharp downside breakout..

Observation: 

After showing a steep weakness on Friday, Nifty witnessed sharp follow-through decline on Monday and closed the day lower by 246 points. After opening with a downside gap of 180 points, Nifty showed minor upside recovery from the lows in the early mid part of the session. The market was not able to sustain the upside recovery in the mid to later part, as it slipped into further weakness and finally closed near the lows. The opening downside gap remains unfilled.

A reasonable negative candle was formed on the daily chart with gap down opening. Technically, this pattern indicates short term top reversal and signals more weakness in the near term.

The larger degree positive chart pattern like higher tops and bottoms is intact on the weekly chart and present weakness could be in line with the formation of new higher bottom of the pattern.

Still there is no confirmation of any higher bottom reversal yet at the lows. Nifty is currently nearing weekly 10 period EMA around 22200 levels. The said moving average has offered supports for the market in the last few months.

Conclusion:

The short-term trend of Nifty continues to be weak. The next lower levels to be watched around 22000. Immediate resistance is at 22400 levels.

Nifty – Hourly Timeframe chart

Nifty – Daily Timeframe chart

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