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Week Ahead: Nifty to retest key lower support of around 9700-9680 levels by next week

HDFC Sec | 21 Aug, 2017  | Follow Author | Add to my Favourites 
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Weekly Timeframe: Post sharp decline of last week, Nifty shifted into consolidation during this week  and closed the weekhigher by around 1.30%, as per w-o-w basis.

- A small body positive inside-day candle has been formed with long upper shadow, which is suggesting a consolidation after a sharp decline of last week. This pattern was not able to nullify the negative impact created by the long rang bear candle of last week.

- After breaking below the immediate weekly support of trend line (brown dashed line) around 9850 levels, Nifty showed upside bounce back during this week, but was not able to sustain above the previous broken support trend line (at 9945), as per the concept of change in polarity.

- After the formation of significant top reversal pattern like ‘bearish engulfing’ during last week, Nifty was not able to show sharp upside bounce back during this week as per weekly closing. This formation is suggesting that the bearish engulfing is still intact and one may expect negative impact of this pattern in coming weeks.

- Weekly 14 period RSI has dipped down to the key upper levels of 60, but the lack of strength is visible during its upturn from that 60 levels. This lack of strength could eventually result in weekly RSI to move below 60 levels. This expected pattern of RSI could mean; a strengthening of downside momentum in the market.

Summing Up:

- The underlying trend of Nifty as per smaller and larger timeframe is still weak and the upside bounce back of this week seems to have reversed down.

- There is a possibility of Nifty showing further weakness and retest of the key lower support of around 9700-9680 levels by next week. The support area of 9700 levels could offer minor buying again by next week, but that support could eventually be broken on the downside in the next 1-2 weeks.

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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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