Nifty forms a bearish engulfing pattern indicating a short-term reversal placed on higher levels of 10600 – 10620. A closing was seen below the trading range of previous few sessions indicating a violation of short-term supports and bears grip may further tighten.
It was a classical pullback on the charts with Nifty trading in a tight range amid festivals and as soon as we saw some volume coming back it was weak in breadth and bears took complete advantage of it. A close below previous sessions trading range further indicated a bearish sentiment which means lower supports of 10300 – 10320 may be tested. Resistance is now clearly visible in the range of 10600 and further, if the pattern is to be believed we may see 4 digits in the coming month.
We suggest cautiousness and approach with a sell on advances as a strategy in short-term as we may see further weakness coming in.