Nifty after beginning the last week on a high note, took a U-turn from the day’s high and shed almost 120 from the day’s high.
Despite the early setback, the bulls attempted to regroup and march high and thus, registered a new swing high of 11,618. Just when it appeared that the bulls have witnessed a breakout of the consolidation range, the notorious bears pushed the bulls down, and once again, Nifty was back in the consolidation range. Nifty ended the week with mild gains of 0.35 per cent.
On the weekly chart, Nifty formed a small body candle, and on the daily chart, it formed a bearish candle that resembled a ‘bearish belt hold’ pattern. During the last week, Nifty took the support of 20-DMA for at least three times and filled the gap of September 4. The net distribution days at the end of the week were six, as one added and one got expired. As per the rule of William O'Neil, the uptrend since March low is now under pressure as the momentum is waning.
Besides, two big sell-offs from the last week added further concern for the market. Friday's last hour sell-off has given a very alarming signal for the market. Also, in the last two sessions, Nifty closed below the previous day's low, which is again a weaker signal. On the weekly chart, it closed above the previous bar’s high but it’s a bearish bar as it closed below the week's open. Heikin-Ashi further shows that the trend is at a mature stage.
Going ahead, the last week’s high of 11,618 is a crucial resistance. The 20-DMA is almost flattened; it is indicating a consolidation phase for the sideways action to continue. In any case, if Nifty fails to move above the range of 11,620-11,690, we may expect a dip towards at 11,281 level. There are confluences of support around this level. There is trendline support around 11,380 and September 10 gap support.
All-in-all, the level of 11,620-11,690 on the upside is likely to act as a resistance, and on the downside; the level of 11,420-11,370 is important support. In case of breaching the support zone, Nifty may correct towards the 11,280-11,185 zone.
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