Nifty making a trendechannel: The Nifty has made a trendchannel since October 2009. The trend broke out from the channel and almost fulfilled its measuring implication, but has now fallen back to the channel. This can be a pull back movement. However, it the Nifty breaks below 5700, it will break into the channel and can get dragged down to the base line of the channel which is reading at 5175.

Medium / long term momentum is indicating divergence: The medium / long term momentum indicator (MACD) is showing a divergence in its chart. The price chart has made two higher tops (8/1/10 & 5/11/10), but the orresponding levels in the MACD are making lower tops. This is indicating bullish fatigue in the chart and suggests that a phase of weakness could be developing in the trend.

Outlook: The medium term charts of the Nifty are no more in a position of bullish strength. Given the technicals, weakness has set in, in the trend and can lead to a correction over the medium term. Presently, the Nifty is trading in "no man's land". A move below 5700 can drag the Nifty down to 5175. The odds look favourable for such a move.

Bouncing off 200 DMA: The index is near its 200 Day EMA (8500). The trend seems to be getting support at this level and is attempting to retrace some of its fall. However, the overall behaviour does not exude strength and confidence.

Momentum: We have used a Slow Stochastics indicator to understand the trend. The trend has bounced after this indicator reached its oversold zone. This indicator turned down, but has again moved up. An advance of a minor nature can develop again. But the indicator does not seem to suggest force on the upside.

Outlook: The Midcap index lost its bounce during the week and has tamely traded in a very narrow band. The trend is suggesting a lack of sustainable strength. A minor bounce can be expected but the overall bias is towards weakness.