NIFTY Enters Oversold Territory, Likely To Find Temporary Support At 20WMA Mark
If the Index is able to hold its own and not break down below the 20 WMA mark, we’ll likely witness the formation of another bullish wave from next week onwards.
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The Index meandered down as anticipated, in a relatively tepid and event-less week. We witnessed a soft opening this week for all Asian markets, and crude prices edged down slightly amidst fears of a slowdown in China, the world’s largest oil importer. Locally, we had inflation data prints coming in at 3.18% (an eight-month high, but well below RBI’s target).
Though the index formed a bearish engulfing pattern on Friday, we’re unlikely to witness a massive drop this week, as both weekly and daily momentum oscillators indicate that the market is temporarily oversold. This week is likely to be another meandering one, without significant movement in either direction. The broader trend will continue to be weakly bullish unless the Index falls below the 11,275-11,290 mark (the low made in the week of 13th May) in this weekly wave. This is an important week that will signal whether the current bullish trend is due to continue, or whether a deeper cut is in the offing. If the Index is able to hold its own and not break down below the 20 WMA mark, we’ll likely witness the formation of another bullish wave from next week onwards.
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