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Nifty

The index confirmed the bearish trend with a gap sequence of a ‘Breakaway Gap’ followed by a ‘Runaway Gap’. The next inline would be an ‘Exhaustion Gap’ which would be awaited to confirm the termination of this bearish move. Selling pressure within the index constituents was selective which helped the index to maintain its close above the immediate deciding support level around the 22120-22000 mark which is the lower end of the weekly channel support followed by 21800- 21766 (20 WEMA Support). The gap at 22500 would now serve as a major resistance while the immediate ‘Runaway Gap’ at 22260 is an ideal a trail stop level to be considered to hold fresh short selling positions. Being the truncated week & both trend strength indicators far away from their oversold zones there is a good chance for an extended selloff to continue throughout the week. With no signs of recovery, uptick if any due to an oversold intraday reading could provide further opportunities for a sell on rise trade. Options data indicates 22500 to remain as a stiff resistance followed by 22400 while 22000 to remains key support zone for validation of further trend weakness. Given that the index is likely to revisit its weekly channel pattern support base at 22000, it is best to exercise caution when pursuing any pullback moves or to discontinue the buy on declines strategy until a reversal formation is evident on its weekly scale.

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