Technical View - April 26, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: UTC)
After showing volatility in on Friday, Nifty witnessed sustainable upmove on Monday and closed the day higher by 143 points. After opening on an upside gap of 108 points, Nifty made an attempt to move up in the early part of the session, It failed to sustain above 14550 levels and later shifted into a consolidation movement, which continued till the end of the session, The opening upside gap remains unfilled.
A small body of positive candle was formed with long upper shadow. Technically, this pattern indicates a formation another high wave type formation and this suggest that the market is preparing for another sell on rise action in coming sessions.
In previous two occasions similar type of pattern were formed on third day (after a rise of two days) around the hurdle and the market has finally witnessed a sharp one day decline in the subsequent session. Current pattern indicates a similar possibility in the market in the next 1-2 sessions. Nifty has faced stiff resistance at previous opening downside gap of 14550 levels (19 April) and showed intraday weakness from the highs on Monday.
Conclusion: The short term trend of Nifty continues to be positive, but the lack of strength to sustain the highs/at resistance continued. This pattern opens another round of downward correction from here. The quantum of weakness is expected to decide the short term trend of the market. However, a decisive move below the immediate support of 14400 is likely to open door for the next lower support of 14200-14150 levels in the short term. The sustainable up move could only resume above 14550 levels.