Market outlook: Sensex, Nifty trend appears weak. It's time to be cautious

A rise in the Nifty has been used for squaring longs and shorting stocks. The medium-term support of 11,550 - 11,500 should act as a range for a bounce

S&P BSE BSE Sensex:  For the 30-share index, 39,500 is a key level to track. A consecutive close below this may trigger more sell-off. Last week, the index failed to cross 40,000 decisively, indicating selling pressure at higher levels. The formation on the charts also resembles 'Head and Shoulder' pattern, which suggests a further downside once the index starts trading below the neckline. The immediate support comes at 39,000 levels. However, if breach with strong volumes in next session may see the index head towards 38,600 – 38,400 levels. CLICK HERE FOR DETAILED CHART VIEW
 
Investors need to hold their trading bets with a strong stop loss. The major technical indicators, RSI (Relative Strength Index) and MACD (Moving average convergence and divergence) have made negative crossovers in the daily chart, which is a sign of a negative reversal.

Nifty 50: The index is on the verge of forming a 'Head and Shoulder' pattern, which suggests traders should remain cautious for the coming sessions. A breakdown will harm the sentiment further, which is already deteriorating. No doubt that 11,800 stays as strong support on a closing basis and a continuous close below the same may lead to 11,550 to 11,500 levels. CLICK HERE FOR DETAILED CHART VIEW

As of now, a rise in the index has been used for squaring longs and shorting stocks. The medium-term support of 11,550 – 11,500 should act as a range for a bounce. Having considered that, the speed at which the index should have risen upward has slowed down to a great extent. Given the major daily moving averages, 50 DMA, 100 DMA and 200 DMA, along with RSI that is trending around 60 levels and the MACD which is trading above zero line – the index is strongly resisting a close above the 12,000 mark.