Sensex support will be at 7554 and 7385 levels

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Hitendra Vasudeo, Technical Analyst:

The Sensex has violated the rising trend line of the current rally from 6138. The rally started from 6118 and made a higher bottom at 6138. Further is moved up sustained basis making higher bottom to the top of 7921. The last major higher bottom was at 7558. Subsequently from this point the Sensex had scaled to a high of 7921.

As a result of the violation of 7730, it was obvious that the 7558 level would be tested. The daily trend has turned down after the closing on August 22, 2005. A follow up downward movement was witnessed yesterday. Now we are on the verge of testing the low of 7558.

Support will be witnessed at 7558 and is possible for some minor bounce. In the event of a fall and close below 7558, Sensex will start its journey of significant correction. First we will look at the correction level of the rise from 6118 to 7921. Depending on the depth and speed to correction we will move towards alternative correction of the rise from 4227 to 7921 or 4631 to 7921.

The 0.382, 0.500 and 0.618 correction level of the rise from 6118 to 7921 are placed at 7232-7019-6806. On fall and close below 7558 on daily and followed by a weekly close as well below 7558 will take the Sensex down to 7232 at least. To outer extent the slide can go to 7019-6806 if the speed of correction is more and if the correction gets extended in term of time.

A weekly downtrend will get confirmed if it violates 7558 and also closes the week below 7734. If the weekly up trend has to remain in tact then the Sensex on Friday will have to close above 7734 and as higher as possible.

The expanding rising trend line from 6696 and 6954 top had been cross in last three weeks and we were trading above it. Yesterday, we have moved below that trend line and a fall and close below 7558 will confirm the reversal. The trend line value is at 7710.

We are looking at the possibility of the weekly reversal and signal of the downtrend, which will be confirmed in a day or two by Friday.

Indices Intraday Daily Levels

Sensex: Resistance for the day will be at 7724 and 7893. Support will be at 7554 and 7385.  
Nifty: Resistance for the day will be at 2364 and 2424. Support will be at 2304 and 2244.
Nifty Futures: Resistance for the day will be at 2358 and 2407. Support will be at 2309 and 2260.

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