Technical Observation - May 4, 2020 - Nagaraj Shetti - Technical Analyst, HDFC securities

After showing sharp upmove on Thursday, Nifty tanked down in today's session and closed the day lower by 5.74%. A long bear candle was formed today with gap down opening. The opening downside gap remains unfilled. This pattern indicates a formation of crucial reversal pattern like bearish island reversal.

A bearish island reversal pattern is a top reversal pattern and signals more weakness in the near term. Today's sharp decline is also signaling a possibility of a false down side breakout of rising wedge, which was unfolding in the last one month. Hence, further decline from here could confirm a false upside breakout of the rising wedge and could further indicate more declines in the Nifty ahead.

The short term trend of Nifty has turned down sharply, after forming a swing high of 9889 (bull trap). The next downside levels to be watched at 9000 in the next few sessions. Intraday resistance is placed at 9425.

Source : Equity Bulls

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