By Jay Thakkar
AVP- Technical & Derivatives Research, Anand Rathi Share And Stock Brokers
Where are we: The Nifty has closed well in the negative territory in the last trading session which was a budget session and with that it also closed deep in the negative for the last week. The momentum indicators had already reversed well from ‘buy’ to ‘sell’ and with that the prices have also confirmed the breakdown. The index has just closed near its 200-DMA which is very much likely to be convincingly broken going ahead.
What is in store: Nifty closed with a deep cut in the last trading session and has got a sell crossover on its weekly and monthly momentum indicators, so with that the momentum has weakened at all degrees right from daily to monthly indicating further weakness going ahead. As per Elliott Wave Theory, Nifty has formed a rising wedge pattern and it has reversed well from the upper end of the wedge pattern. Now, going ahead 12,000-12,020 will act as a very crucial resistance and till those levels aren’t taken off the risk of Nifty heading towards the lower end of the range i.e. 11,300-11,100 is quite high. The downside momentum will gain strength once Nifty convincingly slips below its 200-DMA support which is at 11,654 levels.
What could traders do: The traders and Investors should remain cautious on the long side and the aggressive traders should utilise this bounce as a selling opportunity as the overall trend has weakened and the downside probability has increased. The banking and financial sector looks quite weak and stock like Axis Bank and State Bank of India should be sold for a short-term downside gain.
Source: Economic Times
