Technical View - May 10, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: UTC)
Another sustainable upmove has witnessed in the market on Monday amidst a range movement and Nifty closed the day higher by 119 points. After opening on an upside gap of 105 points, shifted into a gradual advance with narrow range movements, which continued for the entire session. Minor intraday declines have been used as buying opportunity and Nifty closed near the highs.
A small body of positive candle was formed with minor lower shadow, which indicates an upside continuation pattern. The opening upside gaps of the last two sessions remains unfilled or partially filled. Hence, one may expect another up gap session by Tuesday, as per gap theory. Nifty is currently placed at the crucial resistance zone of around 14950-15050 levels, which is previous swing highs and also the upper end of the broader high low range around 14900-14200, which has developed over the last couple of months.
Nifty not showing any immediate reversal down from near the key overhead resistance on Monday is positive indication and this could signal a possibility of a decisive upside breakout of the resistance as well as the sideways range movement. Hence, a sustainable move above 15100 levels could open the next upside pattern target of around 15600-15700 levels, which could be achieved in the next few weeks.
After moving above the down sloping trend line as per weekly timeframe chart around 14700 levels in the last week, Nifty showing follow-through upmove by early this week could indicate a chances of sharp upside momentum beginning ahead. Weekly RSI moving above 60 is also signaling strengthening of upside momentum in the market.
Conclusion: The short term trend of Nifty continues to be positive with range bound action. The lack of selling interest at the hurdle could mean more upside possibility in the short term. The upside momentum is likely to pick up on a sustainable move above 15100 levels and that could open potential upside targets of around 15700 levels in the coming weeks. Any failure to move above the hurdle could bring minor profit booking from the highs and formation of another higher bottom.