NIFTY Index Chart Analysis

NEGATIVE INFLUENCES LOOM LARGE

As was expected, the Nifty tested the zone of 18,780- 18,880. Since then, the index has entered into a counter trend. Nifty corrected by 2.53 per cent from the lifetime high of 18,887. It exactly tested and traded around the 20 DMA. However, it formed a bearish engulfing pattern around the 20 DMA. As it formed after a decent correction, we can expect some more correction because we consider it as a topping formation and a continuation pattern. Since it closed just flat on Monday, the bearish engulfing is still a valid pattern. The index closed below the rising trend line support on Wednesday i.e. December 7 and it sustained below it.