The Indian benchmark indices are trading lower today. Both the Sensex and Nifty 50 are down 0.5 per cent each. Nifty is trading at 16,502.6 and Sensex is at 55,491. The sharp pull-back from the intraday high on Friday last week and the subsequent fall today indicates absence of strong follow-through buyers in the market.

16,400 on the Nifty and 55,000 on the Sensex are crucial supports to watch. A break below these levels will bring back the pressure on the indices and drag them lower. So the price action in the coming sessions will need a close watch.

The Asian indices are broadly in green today. Nikkei 225 (27,952.26), Shanghai Composite (3,228.93), Hang Seng (21,311.98) and Kospi (2,670) are all up in the range of 0.44-1.09 per cent.

In the US, the Dow Jones Industrial Average (32,899.7, down 1.05 per cent) had declined sharply on Friday. It will have to be seen if it can sustain above 32,500 or not this week. A decisive break below 32,500 will negate the bullish chances of seeing 34,000 and higher levels going forward.

Futures: The Nifty 50 June (16,508) Futures down 0.58 is trading at the day’s low. Intraday resistance could be at 16,540-16,560. As long as the contract trades below this support, the chances are high for it to fall towards 16,450 and 16,400 during the day. The level of 16,400 is a crucial support. If the contract manages to bounce from 16,400, a rise back to 16,500-16,600.

On the other hand, a break below 16,400 will be bearish. In that case the Nifty 50 June Futures contract can fall to 16,300 and 16,200. Traders can stay on the side-lines for now. However, fresh short positions can be taken on a break below 16,400.

Stop-loss can be kept at 16,470. Trail the stop-loss down to 16,370 as soon as the contract falls to 16,320. Move the stop-loss further down to 16,290 as soon as the contract touches 16,240 on the downside. Exit the short positions at 16,220.

Trading strategy: Go short on a break below 16,400. Keep the stop-loss at 16,470 for the target of 16,220. Trail the stop-loss down to 16,370 as soon as the contract falls to 16,320. Move the stop-loss further down to 16,290 as soon as the contract touches 16,240.

Supports: 16,400 and 15,300.

Resistances: 16,560 and 16,700.

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