Technical View - July 19, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: UTC)
After showing range bound action with weak bias at the all time high of 15962 levels on Friday, Nifty slipped into a sharp weakness on Monday and closed the day lower by 171 points. After opening on a downside gap of 169 points, the market made an attempt to move up amidst a range movement in the early-mid part of the session. Intraday upside recovery attempt has failed, but minor upside recovery was observed towards the end. The opening downside gap remains partially filled.
A doji type candle pattern was formed (not a classical one) with gap down opening on the daily chart, which signal another round of downward correction from the swing highs. The weakness of Monday has confirmed a false upside breakout attempt at 15900 levels. This is negative indication for the market, as such false upside breakouts more often reaches down to the lower end of a consolidation/range move or moves below that. Hence, one may expect Nifty to slip further down to 15635 levels or may slide lower in the short term.
At the same time, a formation of unfilled opening downside gap near swing high hints at a possibility of a formation bearish breakaway gap and these gaps are more often formed near the important top reversal patterns. Hence, the recent all time high of 15962 could be considered as an important top for short term.
Conclusion: The short term trend of Nifty seems to have turned down, after a display of lack of strength at the new highs. The overall chart pattern signal chances of market sliding down to the crucial support of 15635 levels in the short term. But, there is a higher possibility of Nifty moving below this support over the period of time. Any upmove from here could find selling pressure around 15825 levels.