Technical View - April 30, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: UTC)
After showing higher levels weakness on Thursday, Nifty witnessed a sharp weakness on Friday and closed the day lower by 263 points. Nifty opened on a downside gap of 144 points and showed a sustainable upside recovery in the early-mid part of the session. Inability to sustain the upside recovery has resulted in a decline from the highs in the mid to later part of the session. The weakness got intensified towards the end and Nifty closed near the low.
A long negative candle was formed with long upper shadow, which indicates a sharp profit booking in the market. This action has confirmed a lack of strength of stage upside breakout of the upper area of broader range movement at 15000 levels. Having showed a strength to move up recently, there is a possibility of halt in this decline in the next few sessions and one may possibly expect a higher bottom formation at the lows.
Nifty on the weekly chart formed a small body of positive candle with long upper shadow. This action signal a failed attempt of upside breakout of last few months range movement. Nifty is currently placed above the crucial moving averages of weekly 10 and 20 period around 14250 and 14600 levels. Hence, there could be another attempt of upside bounce by next week.
Nifty as per monthly chart has formed a high wave type candle pattern in April month, beside the doji pattern of March month. Hence, there is no reversal formation after a doji of last month at new highs. The formation of long lower shadow in the last two monthly candle could mean a possibility of a comeback of bulls from the lower levels again.
Conclusion: The sharp weakness of Friday, after the failed upside breakout attempt of upper range at 15K of Thursday seems to have dampen the effort of bulls. The overall chart setup from smaller to larger time frame signal chances of upside bounce in the market from the lower levels and a formation of higher bottom around the support of 14500-14400 levels by next week. On the upside 14850 is likely to act as a hurdle.