The previous week’s price action can be divided into two parts—the first half was more of consolidation with no major movement and the second brought volatility to the market.

We managed to touch the psychologically important mark of 12,000 but failed to sustain there. In fact, due to a sudden selloff in global markets on October 15 over the fear of a second wave of coronavirus hitting major European countries, we witnessed a sharp decline in our markets.

Fortunately, there was no follow-through to this as we saw a modest recovery and the week ended well above 11,700.

In the last couple of weeks, we have seen a remarkable recovery in the Nifty after it tested the 200-day SMA level of 10,800.

Since the move was extremely swift and markets had a winning streak of 10 straight sessions before October 15, any uncertainty was likely to trigger profit-booking and this is exactly what we saw.

Now, looking at charts, this down-move should only be interpreted as a pullback towards the recent trendline breakout points.

This coincides with the 20-day EMA level of 11,600. Hence, all eyes would be on this level during this week.

However, since the fall has to do with global uncertainty, it would be important to see how things pan out and if things worsen, we may see the market correcting further.

A close below 11,600 would apply brakes on the recent optimism and we may then see some extended correction in the market.