More consolidation of index on cards

A directional and trending day taking Nifty below 18,000 level and its short term MA. It was a selling pressure throughout the day for the broader market. Selling pressure was seen in a sustained manner and across the board such as PSU Banks, Realty, Metal and Banking, shedding 3 per cent to 5 per cent. The ADX which we mentioned was clearly indicating a missing trend strength in the reversal that was witnessed this week.

On a shorter time frame, a channel is seen forming which is providing downside support at 17,750 levels. Lower High and Lower low is forming on a shorter timeframe, and Harmonic ABCD pattern also suggests key support at 17,704.10.

These two levels are very important for short term traders while on a higher timeframe the trend remains intact.

Technically, Nifty short term 20 MA is flattening while the long term MA is positive on a rolling basis giving mixed signals in the short term. At the same time, 17,500 – 17,400 is key support for the entire trend we are witnessing since 2020.

RSI, as previously shared, was making a divergence but is now approaching the oversold zone of 40 and is currently reading at 48.25. As rotation plays out along with profit booking, we may see some consolidation in the benchmark index.

After a stellar rally we have witnessed, short term correction is part and parcel of the trend and brings in fresh momentum while shaking out the weak hands.

Sectors such as PSU Banks, Realty, and Metal have been the outperformers and may see some traction but one should remain stock specific at present and a bit cautious in approach.

(The author is Technical Analyst, Finversify)