Charts indicate cautious trading for investors

The broader market came under the bear attack as the mid-cap, small-cap, and micro-cap stocks fell sharply lower. In recent history, the Nifty has registered one of the longest streaks of declines, eight days, It managed to hold the previous low on a closing basis, but recorded the lowest low. The 22,800 level has been holding for the last 16 trading sessions and is now a crucial support.

The recent longest streak of swing is 12 and 14 days, from the 14th of August to the 26th of September. The reasonable trending swing life is normally 8-13 days on either side. In a bull market, the uptrends are longer and have a mix of small and big candles. In a bear market, the declines are sharper, and all pullbacks are traps as long as the price moves in lower highs and lower low manner. The current price structure is a perfect picture for the bear market. So, the recent swing high of 23,807 is the crucial resistance and only a close above this level will form a higher high, which is the first sign of reversal. At the same, the low of 22,774 must be protected. The current downswing may end anytime in the next five days. If the bounce begins from Monday, the Nifty faces resistance at the 23,169-255 zone.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)