In the early sessions of the last week, markets took a smart U-turn, tracking positivity across the globe.
Although new highs were hit, it was not convincing. The main reason behind this was that Nifty, Nifty Bank and Nifty Midcap 50 were making new highs with the 3-points negative divergence in the RSI-smoothened oscillator on the daily chart.
Such divergence with the 3 points is generally considered as a sign of caution and hence, repeatedly we advise not getting carried away by the euphoria.
Now, although Nifty has not broken any major supports, the development in Nifty Bank does not look encouraging at all.
In fact, the entire banking and financial space was the main culprit behind last Friday’s correction as they took a solid knock.
To be specific, Nifty Bank has confirmed a double top pattern on the daily chart and has broken its important swing low with ease.
The weekly chart of the same exhibits the confirmation of the ‘long-legged Doji’ pattern.
For Nifty, the important support to watch out for would be 14,222, below which, the recent bullish structure will get distorted to extend the correction towards 14,000–13,800 levels.