Week Ahead: Next downside levels to be watched is ~ 9900 to 9850 levels | The underlying trend of Nifty from daily to monthly timeframe is down | Indianotes.com


• After showing doji pattern in last session, Nifty shifted into a consolidation today, with weak bias and closed the day lower by ~ 34 points

• Nifty opened today on a slight negative note, and later shifted into a range bound action for better part of session. The upside recovery attempt of afternoon was not successful and Nifty slipped again during later part of session, to close near  the low

• A small body negative candle has been formed today, with long upper shadow. Technically, this formation is indicating a choppy trend in the market, with weak bias. The selling pressure is intact at the higher levels

• We observe a larger range bound action in Nifty, over the last 16-18 sessions (high low range of ~ 10,630-10,300 levels-blue and orange dashed trend lines). Presently, the Nifty is sliding down, from the upper range of 10,630 levels

• Present range bound pattern is now opening the downside trajectory for Nifty ~ 10,350-10,300 levels (orange line), which could be reached by next week

• Normally, such range movements, after the sharp declines, are indicative of halt in downside momentum for specific period, and such patterns more often leads to a trend continuation of prior trend (down trend)

• Hence, a decisive downside breakout of the lower range of ~ 10,300 levels could bring sharp downside momentum back into action again

• The daily 14 period RSI is nearing the key lower levels of 40. If the lows of ~ 40-36 breaks below, then such action of RSI could mean negative for the market ahead

Weekly Timeframe

• After showing a sharp lower levels recovery in last week, Nifty moved up during early part of this week, but was not able to sustain the highs. It showed weakness from the highs of ~ 10 630 levels, and closed the week lower by ~ 33 points, as per w-o-w basis

• A small bear candle has been formed this week, with long upper shadow. This pattern is indicating a rejection of bulls at the higher levels

• The formation of this negative candle, after the formation of bullish candle pattern of dragonfly doji of last week, is indicating an instability of bulls at the higher levels. This pattern could eventually negate the positive impact created by the dragonfly doji

• The key lower support 10,450-400 levels (ascending brown trend line, connecting swing lows and 20w EMA-green curvy line) has been retested this week.

• Technically, If the underlying fails to show strength to move up from near the key supports, then it is presumed that the support is going to be broken soon

• We observe a larger range movement in Nifty as per weekly timeframe, which has formed post sharp decline of early part of February month. Such range movements, formed immediately after the sharp declines, are indicative of down trend continuation patterns

• Weekly 14 period RSI has turned flat ~ 58 levels, and is signaling that it is unlikely to hold for a long. Previously, it has turned above 57-58 levels, and that was coincided with upmove in Nifty. Hence, further weakness in the RSI could mean, resumption of sharp weakness in Nifty.

Summing Up: Forecasting for coming months

• The underlying trend of Nifty from daily to monthly timeframe is down. The important top reversal pattern has been formed/confirmed, from smaller to larger timeframe

• Expectation for next week: We expect further weakness in Nifty down to the retest of important support of ~ 10,300 levels for next week, where one may expect emergence of minor buying interest again

• The present range pattern (high low range of 10,630-10,300 levels) could eventually be broken in this month, and that could possibly open up second round of sharp weakness in the Nifty

• The downside target to be watched for Nifty is ~ 9900 to 9850 levels, which could be achieved in the month of March or by April 18

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