In our last post on Nifty we pointed to a possible sentiment extreme in the markets, though we needed the market to move below the crucial support of 8866. We were anticipating it to reach this level earlier than it actually did in order for a substantial correction to materialize. Anticipating time period is always a bit tricky, but Nifty has finally come close to testing the crucial 8866 level. In fact the recent peak of 8966 was registered on the very next morning after we issued our report, but the subsequent sell off wasn’t quick enough to break below the 8866 on the same day. Chart Below:
Currently we believe it is very important for Nifty to take some support close to the 8768-8802 levels for it to attempt to take out the recent highs of around 8966 soon. If the Nifty fails to find a support in this zone, it is very likely that the next support of around 8720 would also not be able to hold for too long and we may see a much deeper fall that may extend to 8600 levels. Though more precise levels may only become clear once we see the price action unfolding.