After showing higher level weakness on Friday, Nifty continued with sharp decline on Monday and closed the day lower by 284 points. Nifty opened on a positive note and started to show weakness with volatility after the opening. The down trend continued for the entire session and the upside recovery attempt in between was used for sell on rise. Nifty finally closed near the lows.
A long bear candle was formed on the daily chart, which indicate a sharp downward reversal in the market after a decent upside bounce of last week. The negative chart set up like lower tops and bottoms is intact on the daily/weekly chart and the and the recent swing high of 17489 could now be considered as a new lower top of the sequence. Hence, one may expect Nifty to slide down further to form a new lower bottom (below 16782).
Nifty on the weekly chart continued with fresh weakness after a failed upside bounce of last week. The market is now placed below the 20w EMA as per weekly chart. The crucial top reversal pattern has been confirmed on the long term charts like monthly. Hence, any attempt of upside recovery could be short lived and more weakness could be in store for the near term.
Conclusion: The short term trend of Nifty continues to be negative. The sharp downward reversal of the last two session after a decent pullback rally could open further decline down to 16700 or lower in the next few sessions. Any upside bounce from here could find strong resistance at 17080 levels.