Technical View - July 8, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: UTC)
After showing sustainable upside bounce from the lows, Nifty slipped into a sharp weakness amidst a weak global cues on Thursday and closed the day lower by 151 points. After opening on a slight negative note, Nifty made an attempt to show upside recovery soon after the opening. The weakness got triggered in the early part and the selling got intensified in the mid to later part of the session. Nifty finally closed the day on a minor upside recovery note.
A long negative candle was formed, that has negated the short term positive indication created after the upside bounce of Wednesday. The formation of gravestone doji of 6th of June remains intact and the intraday double top formation is also alive at 15915 levels.
Nifty is now placed at the support of 20 day EMA and minor up sloping trend line support around 15720-15700 levels. A decisive move below this support is likely to bring more weakness in the short term.
Previously, the formation of long bear candle has failed to continue with sharp negative implication in the last one month, as the underlying bounced back immediately after such long negative candle formation. If sharp weakness continues in the subsequent session or a long negative candle gets formed, then all bets of short term uptrend could be off and that could open broader weakness in the market.
Conclusion: The uncertainty of bulls at the crucial hurdle of 15900 continued, as the market tumbled down sharply from near the hurdle. Although Nifty placed at the minor support of 15700-15640 levels, a sharp follow through weakness could open decline towards 15450 in the near term. Any pull back rally from here could initially find resistance at 15800 levels.