Technical View - April 19, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: UTC)
After showing upmove in the last three sessions, Nifty witnessed a sharp weakness again on Monday and closed the day lower by 258 points. Nifty opened on a downside gap of 311 points, Nifty slipped into further weakness in the early part of the session. A sustainable upside recovery has emerged from the days low of 14191 and Nifty showed upside recovery in the mid part to later part of the session and closed the day by erasing most of the intraday loss. The opening downside gap remains unfilled.
A small body of positive candle was formed with long lower shadow. Technically, this pattern could mean a bullish hammer type formation (not a classical one). Having formed this upside recovery at the important lower support of 14200 levels could mean a possibility of upside bounce in the coming sessions.
Negative chart pattern like lower highs and lower lows continued in the market as as per daily timeframe chart and Nifty has formed a new lower low of 14191 on Monday. As per this chart pattern, one may expect small upside bounce in the next 1 or 2 sessions. On the way up, the opening downside gap of 14550- of Monday could offer strong resistance at the highs.
Nifty on the weekly chart, placed at the key lower support of 20w EMA around 14200 levels. Another key moving average of 10w EMA is now at the resistance around 14600 levels. The negative chart pattern like lower highs and lows continued on the weekly chart and Nifty is now placed near the lower lows.
Conclusion: The short term trend of Nifty seems to have reversed on Monday, after a reasonable upmove of the last three sessions. But, fine upside recovery raise some hopes for bulls to make a comeback for the short term. Having placed at the crucial lower supports of 14200 and the chart pattern of daily/weekly timeframe, one may expect minor upside bounce in the next few sessions (up to the gap hurdle of 14550) There is a expectation of next round of weakness from the highs.