As mentioned in the previous weekly review, price tends to be short term bearish, aiming towards the Weekly mid Bollinger Bands (20 SMA, yellow), Chart 1. Should or shouldn’t the price be supported at that level will determine the next short term sentiment. However, a daily Higher High can initiate a deep correction up before new signs of weakness might be re-established again.
Taking out the Low of point A at 7516.85 will most likely take out the low of point B at 7405.15 within the same bearish momentum. Then wait for a correction up to appear and look for new signs of weakness in order to be short term bearish.
As for the current midterm price action, there are much more chances to see the downtrend that has been taking place since March-2015, continues towards point D at 6638.55 (and probably taking it out) rather than a reversal up to take the high of point C. However, we should expect deep correction(s) up (like the one we have been facing since March 2016) as well.
The levels of 7252.4 and 6780.15 should serve as good support in between.
A major support that can end this downtrend might be found between points D and E. Time will tell and this issue will of course be addressed properly should the price approach this area.
Chart1: NIFTY50, Weekly chart (at the courtesy of Netdania.com)
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