Time for a bounce ?

Relentless selling amid high volatility saw the Sensex swing in a wide range of 1,789 points last week. The index scaled to a high of 19,971 early in the week and thereafter tumbled to a low of 18,183.

The index made a lower high and lower bottom for the third week in a row. The Sensex eventually ended the week with a loss of 845 points at 18,853. The index broke its monthly support (S2) of 18,290, during the week, but recovered smartly from lower levels on account of short covering.

The 14-day RSI (Relative Strength Index) for the Sensex is in oversold zone at 23. An RSI less than 30 is said to be oversold, while an RSI of more than 70 indicates an overbought situation.

The pull-back is likely to last for a couple of days. However, the index may face stiff resistance around the 19,500 level, above which the upmove is likely to accelerate. On the downside, the index is likely to test its major support zone of 17,000 to 17,300 in the near term. The Sensex is likely to face resistance around 19,530-19,750-19,960 this week, while it is likely to find support around 18,170-17,960-17,750 on the dowside.

The NSE Nifty moved in a range of 587 points. From a high of 5982, the index tumbled to a low of 5394 before settling with a loss of 298 points at 5609.

The index has taken mid-term (50 days moving average) support at 5415. On its way up, it is likely to face resistance at its short-term, 20 days moving average, which is placed at 5785.

The Nifty may face resistance around 5835-5900-5970 this week, while on the downside, the index is likely to find support at 5385-5315-5245.