The National Stock Exchange Nifty struggled around its short-term moving average throughout the week, and eventually managed to close higher than it’s short-term (20-day) moving average on two occasions on the daily chart. The Nifty somehow held on its short-term (20-week) moving average, which is currently at 5,850, a break of the same could spell trouble for the markets.
On the positive front, the Nifty has formed a hammer pattern on both daily and weekly charts, which indicates that the bulls are strengthening. Hence, a possibility of an upside is higher than that of a downward move.
The daily chart also indicates congestion in the 6,030-6,060 range. So, the Nifty will have to break past this range for a clear cut direction. Till then, we may continue to see range-bound movement.
However, the weekly chart shows fear for investors, as the index has been taking support around its short-term (20-week) moving average for the last four weeks. If the Sensex closes below 19,470 during the week, we could see heavy bear pressure, with a possibility of the index falling to 18,300 odd levels.