Bad Friday Ahead

The Nifty lost 19 points over the day to close at 4179. A day ofextreme volatility that saw the Nifty move between 4150-4210 a fewtimes making trading difficult both for the bulls and bears. Eventuallythe bears turned out victorious as the indices closed near the days lowand below the support of 14200/4200. During the volatile action theNifty achieved the “Wedge” pattern target of 4150, which wepresented in our weekly report. The volume activity was very stronghinting at a fierce battle between the bull and bear camp. The reactionhas led to the oscillators testing the oversold line while the 30-EMAhas also been tested. Also, an important trendline breakdown hasbeen confirmed on the daily chart that would have a bearish effect onthe price action in the near term (See Exhibit 1 on Page 2). Fortheday, major support seen at 4150 and 4100 while resistance seen at4184 and 4196. Overall, with a fresh breakdown confirmed yesterdaybelow 14200/4200, the indices are likely to correct further and getclose to 14000/4100 in the extreme short-term.