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CNX IT: Expect upside bounce back from the lows

HDFC Sec | 05 Dec, 2016  | Follow Author | Add to my Favourites 
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- Daily timeframe: After a sharp upside bounce back during last week, the CNX IT sector has slipped into decline during this week.

- The strong multiple overhead resistance of around 10050 and 10150 levels (50 day EMA-blue curvy line and valuation resistance as per the concept of change in polarity) have led to reversal in the IT sector.

- The key sector participants like TCS, Wipro, Tech Mahindra, Mind Tree, Just Dial are all showing down ward corrections after the minor upside bounce back.

Weekly Timeframe: After witnessing an excellent upside bounce back, the IT sector has slipped into corrective mode during this week.

- The key overhead resistance of 10060 levels as per the concept of change in polarity (green dashed line) was not able to surpass on the upside during this week.

- The weekly candle pattern of the last three weeks is indicating a possible formation of an important bottom reversal pattern of ‘morning doji star’ (1st candle-long range bear candle, 2nd-doji pattern and 3rd long range bull candle, which has completely engulfed first bear candle).

- This mentioned pattern of IT sector is an important bottom reversal pattern as per larger timeframe like weekly and this suggests that the current correction could end soon.

Summing Up:

- Though IT sector is showing minor weakness from the highs, we observe a strong bottom reversal pattern as per larger timeframe. The present weakness could possibly end around 9800 levels and we expect upside bounce back from the lows.

- On the upside, the key overhead resistance of around 10060 levels could eventually be broken on the upside and the upside breakout of this hurdle could lead IT sector towards the next upside levels of 10450 levels over the next 1 month.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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