Technical Outlook: The Short-term Trend For Nifty Appears Bearish

The NIFTY breached a critical inflection point last week, when it went past the 10,400/ 10,500 mark (the middle Bollinger Band or the 10-week moving average). The fact that it did so in a relatively smooth, unfettered fashion is a good sign for the markets as a whole.

Having said that, the index faces its stiffest test in weeks, over the next fortnight or so.

If it can buck the trend and move forward to the upper Bollinger Band or the 11,000 mark, we can safely say that we're out of danger, and an extended bearish phase is off the cards.

Unfortunately, the key momentum indicator (the stochastic oscillator) indicates that momentum may be waning, with the lines appearing all set to make a bearish crossing, as is visible even to the untrained eye.



All in all, the short-term trend for the NIFTY appears bearish, and it looks like the bulls are in for a hard time. Unless some sudden, unexpected positive news flows were to reverse the momentum oscillator and prevent the bearish crossover from taking place, we may see the NIFTY jamming at these levels before journeying downwards again.