Very weak candle more pain may be in store for Nifty.
Today we saw a confirmation of a pattern similar to head and shoulders pattern. The pattern is not exactly the classic head and shoulder but it is similar which can yield similar break down results meaning more pain might be in store if next 2 support levels are broken. The low of August 5 that is 24055 will be vital zone for Nifty to take support and make a comeback. There are 2 weak supports before we reach that level. These supports are near support previous to that at 24407 and 24113. If by chance 24055 is broken the next support is there near 23811 followed by 200 days EMA (Father line) at 23428. Below this level there is pure bear territory as this chart is drawn on daily candle sticks. On the upper side the resistances that Nifty will now face are at 24711 (Strong resistance along with a trend line resistance). If this resistance will be crossed the next resistance is at 24879. By chance we get a closing above this level Mid channel resistance and Mother line resistance of 50 days EMA awaits us near 24995 and 25231 respectively. The Macros of Israel Vs Iran++, US Elections and China stimulus are the major factors affecting FII outflow. Indian Growth story remains intact sectoral churning near the bottom is a real possibility. Overbought sectors of Defense and PSU in addition to some Mid and Small caps are taking most of the beating. At some point their PE will become attractive and at some point their dividend yield will also attract investors. whether that point has arrived or will arrive soon is yet to be known. There are no signals of bottom formation as of now and Shadow of the candle remains negative.
Happy Candles Investment
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