Stock Picks of the Day | Use Pullback towards 10900-10950 to book profit in longs

The persistent sell-off in the US market eventually put break on an ongoing optimism seen in our market and nifty nosedived sharply in last Friday’s session. During the week, Nifty tumbled further after forming a Bearish Divergence pattern and registered a low of 10534.55 during Wednesday’s trading session. Subsequently, the selling pressure exhausted, and index saw decent recovery in line with the global peers.

Looking at the daily chart, Wednesday’s low coincided with the lower band of Bollinger band which acted as an immediate support. At this juncture, nifty retraced nearly 61.8% of its entire fall drawn from the top of 10985.15 to the bottom of 10534.55. 

At this juncture, the volatility on index is significant high therefore we are waiting for momentum to cool-off as reward to risk ratio at this point of time is not favorable. As far as the levels are concern, 10830 – 10850 zone will be a strong resistance and any sustainable move beyond this level will allow nifty to rally and retest its recent swing high of 10985.15. On the flip side, 10660 likely to act as an immediate support below which nifty will slide further towards 10500.