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The Nifty saw decent profit booking during the initial part of the week, which was largely in line with our expectations. In our previous update, we highlighted that 10,929, which coincided with the bearish engulfing candle high, will act as a strong hurdle. It will be a daunting task for the bulls to surpass these levels immediately.
Looking at the weekly chart, the relative strength index (14) has a signalled a bearish range shift. The Nifty once again broke its previous weekly low of 10,755 and eventually closed below the same on Thursday.
The index is broadly trading in a 10,700–10,900 range, due to which the daily Bollinger band has contracted further. Hence, we are likely to see high volatility in coming trading sessions.
On the lower side, 10,700 will act as immediate support and any sustainable move below this will drag the index lower towards the 10,600–10,550 zone. On the higher side, last Thursday’s gap area of 10,834–10,843 will act as a near term hurdle whereas a strong hurdle is placed at 10,929 levels.
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