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Nifty forms 3rd lower top, being cautious wouldn't harm

Indices staged a strong comeback towards the last hour of trades. The strong recovery was seen despite Nifty forming a “Shooting Star” kind of a candle stick pattern on Thursday, which indicates early signs of profit booking.

The current move indicates strength and going forward important resistance points for Nifty is seen around the 10,820 levels. Post this level, it would lift Nifty towards Karnataka elections high of 10,930 levels.

Overall, Nifty continues to remain stuck in the Symmetrical Triangle pattern on the daily chart. Our weekly chart analysis indicates that the index has formed a third lower top and has also formed a classic dragon fly Doji which indicates uncertainty at the current juncture.

Bank Nifty is the real cause of concern as the heavyweights from the private banking space are under performing, while PSU Bank are trying to make up for the lack of leadership.

Initial support is seen around the 26,220 levels, while 26,660 is the important resistance zone.

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