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Is a deeper market correction on cards? Here's what technical charts say

Bears waiting for an opportunity
Benchmark indices are trading with over 2 per cent cut on Friday, tracking a mammoth plunge on the Wall Street and weakness in Asian markets. The past few sessions have seen the indices slip from their recent high of over 10,000 levels on the Nifty50 as negative news flow and global cues triggered a bout of profit booking at higher levels.

Is there more pain in store for the markets? Here is what charts indicate.

S&P BSE SENSEX: After crossing the 200-weekly moving average (WMA) at 34,200, the index is unable to maintain follow-up buying. Going forward, if 32,400 is taken out decisively and selling pressure starts to accelerate further, then the downside may see bearish sentiment grip the markets. As a result, the index may not be able to move past 34,000 levels in the coming days. The daily chart shows a struggle the index has witnessed above 34,000 levels where the selling pressure remains intense The 100-days moving average (DMA) is placed at 35,100 on closing basis. CLICK HERE FOR THE CHART

 

NIFTY 50: A clear resistance of 200-WMA and 100-DMA shows weakness at higher levels. For the index, 9,550 remains a key support for the upside. Till this is held, a positive bias should prevail. However, the structure of Relative Strength Index (RSI) validates the formation of “Head and Shoulder”, a sign of a negative reversal. For the upside to emerge, the index needs to first be stable above 10,150 a on closing basis to build the underlying strength. CLICK HERE FOR THE CHART

 

NIFTY BANK:  For Nifty Bank, 22,000 is a crucial resistance. This is the third time the index has seen sellers gaining an upper hand when the index has showed some strength. If 19,150 is taken out convincingly, then the selling pressure may induce capitulation, a fear of loss resulting in liquidating positions. The RSI is resisting to cross 62 value, as per the daily chart. CLICK HERE FOR THE CHART

 

NIFTY PHARMA: This index looks promising from the medium-term perspective. As it breakouts (monthly chart) and stabilises above 200-WMA, an upside is imminent. Any correction may see added volumes, which will build a base for the upside. For the index, 9,500 remains a key support level, as per the daily chart. Indeed, the RSI has come out of oversold condition as per the daily chart, yet the price is not showing any major weakness. CLICK HERE FOR THE CHART

 

NIFTY FMCG: The 200-DMA level has been the resistance for this index since April 2020. Till index does not cross 29,700 mark, the weakness may prevail. The 50-DMA and 100-DMA placed at 28,666 and 28,145, respectively will act as the support levels for now. The RSI has made a negative crossover, with Moving Average Convergence Divergence (MACD) losing strength as the index fails to conquer the 200-DMA. CLICK HERE FOR THE CHART

 



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