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Nifty

The index exactly followed the exhaustion rule around the notified intraday reversal zone around 21766 & formed a perfect ‘Piercing line ‘candlestick formation. But for the pattern to get underway with its bullish implication, a confirmatory close above 22320 is required; otherwise, the pattern stays void. Both its trend strength indicators are placed well for further weakness. In addition, the immediate support base around 21830 would be in danger with the ADX rising higher and the RSI below its 50 level. Options data for the final leg of the series indicates firm bounds at 22000 followed by 21800 while upside hurdles are well placed at 22200-22300 itself which would continue to act as a supply zone. The ongoing bounce back looks temporary & may see further slippages beyond 21830 in the coming series. Hence its ideal to refrain from building any aggressive positions during the expiry week. It is likely that the index may refrain from falling below the same during the week & consolidate within the 22300-22000 zone before commencing its next bearish leg. Even for short term investors it is advisable to proceed cautiously with any pullback moves or to stop the buy on declines approach until a reversal formation is confirmed on its weekly scale, as the index is exhibiting signs of a "Channel Pattern" breakdown on its weekly scale shortly.

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