Technical Observation - May 7, 2020 - Nagaraj Shetti - Technical Analyst, HDFC securities

After witnessing high volatility in the last session, Nifty showed narrow range movement in today's session and closed lower. A small body of negative candle was formed today with minor upper shadow. Technically, this pattern indicates range bound action in the market, this could also be considered as a 'calm before storm'.

The bearish island reversal is still intact, the both upside and downside gaps of 30th April and 4th May are unfilled three day's after its formation. Hence, the downside target of bearish island reversal is remains intact around 8910 levels.

We observe range movement in the market over the last three sessions. The higher low formations of the last one month on a daily chart signal possibility of yet another upside bounce with the swing low of 9116 (6th May), but Nifty sustaining at the highs is doubtful.

The short term trend of Nifty is range bound with weak bias. There is a possibility of minor upside bounce attempt from the lows in the next 1-2 sessions, but that is unlikely to sustain for long. The next down side levels to be watched around 8900. Immediate resistance is placed at 9350.

Source : Equity Bulls

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