Technical View - July 14, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing higher levels sell off on Monday, Nifty witnessed sharp weakness on Tuesday and closed the day lower by 195 points. A long bear candle was formed, which indicates downside breakout of the the range movement of the last four sessions.

On the daily chart, we observe a formation of rising wedge type pattern, which has been developing since past 3-4 months. Now, the range of Nifty is getting narrowed at the upper levels of that pattern and Nifty is showing a crucial reversal pattern near the swing high of 10900.

The upper area of 10900 is a strong resistance as per the study of long term charts (resistance as per change in polarity) and the Nifty turning below from that key resistance could indicate more weakness for the market ahead.

Daily 14 period RSI is placed at the verge of moving below the key upper levels of 60 and we also observe a formation of negative divergence pattern in daily RSI/Nifty. As per its pattern, the daily RSI moving below 60-55 could mean further strengthening of downside momentum in the Nifty.

The short term trend of Nifty is down and the reversal from near the high of 10900 is likely to bring more weakness for the market ahead. The next downside levels to be watched at 10350, which could be achieved in the next one week. Immediate resistance is placed at 10700.

Source : Equity Bulls

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