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Chart reading: Key levels for Sensex, Nifty to watch out for today

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On Friday, the BSE Sensex slipped 689 points, or 1.89 per cent, to close at 35,742 while the Nifty50 index fell 197 points or 1.81 per cent to end at 10,754. Also, on the weekly basis, both the indices closed in the negative territory. BSE Sensex closed down 1.89 per cent and Nifty settled 0.46 per cent lower.

The week gone by witnessed positive sentiment as indices crossed their recent highs, Nifty (10,941) and Sensex (36,446). The trades above crucial moving averages( 100-DMA and 200-DMA) further boosted the morale of traders and investors. The new higher levels have deep significance, indicating breakout scenarios.

NSE Nifty 50: The index closed above 100-DMA located at 10,937, however, could not move higher due to the absence of follow-up buying, chart suggests. The index fell 1.81 per cent on Friday hurting the sentiment. The absence of follow-up buying resulted in retesting of 200-DMA located at 10,766. The technical indicators RSI( Relative Strength Index) and Stochastic have made a negative crossover, however, MACD (moving average converge and divergence) is still trading above the zero line. The recent high of 10,985 marks as a breakout level for the next level of upside with the support arising at 50-DMA located at 10,570, as per the chart.

BSE Sensex: The index has given a breakout by successfully closing above significant moving averages in last week. The cut of 1.89 per cent on Friday shows resilience to move further as selling pressure persists at higher levels, as per the chart. The current level of 35,742 is very near to 200-DMA located at 35,530 (strong support). The 50-DMA, which is situated at 35,160, holds the next support level with its rising trend. The MACD is trading above the zero line indicating buying opportunities in correction, chart suggests.

NIFTY Bank: The index formed "Higher highs, higher lows" (on closing basis) pattern as per daily chart. The said pattern indicates the direction of the trend. An upward trend constitutes higher highs and higher lows, while a downtrend consists of lower highs and lower lows. The immediate support lies in the range between 26,730 - 26,670, the level of gap up with no trades. The 100-DMA falls at 26,500 as per chart.

NIFTY IT: The index failed to conquer the higher resistance of 15,000 decisively. It managed to closed above 50-DMA, however, could not cross 100-DMA located at 14,975. The strong sell-off led to weakness in major IT stocks( Infy - 3.12%, TCS -3%, -3.35%) resulting in the breach of 200-DMA at 14,235. The overall technical formation indicates consolidation pattern in the range between 15,000 - 13,600 as per the daily chart. Any breach of the range would mean beginning of a new trend that may rally 1,000 to 1,500 points, chart suggests.

NIFTY AUTO: The index fell 1.97 per cent on Friday, however, the daily chart formation shows consolidation breakout of the range between 9,300 - 8,600 along with 50-DMA rising upward. The current level of 9,337 could be a retesting of breakout level, may further dip to "gap up" level of 9,180 as indicated by daily chart. The index has consecutively closed 10 sessions in positive candles. So, a negative close could be a healthy correction for the next level of upside, chart suggests.

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