Technical View - July 24, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

Nifty witnessed volatility on Friday, after opening lower and it shifted into a smart upside recovery towards the later part of the session. A small body of positive candle was formed, that has placed beside the another positive candle of Thursday. The opening downside gap of Friday has been filled completely at 11210 and Nifty closed near the upper gap area. This pattern indicates a smart comeback of bulls from the lower levels.

The decline of Friday has not changed the positive sentiment of the market and the formation of two back to back positive candles (Thu/Fri), after the negative candle of 22nd July signal broader range bound action with volatility.

The crucial upper resistance of 11245, which is opening downside gap of 6th March has almost been filled (left with small margin). Nifty not showing any sharp weakness from near this resistance could signal that this hurdle could be tested further from lows.

A long bull candle was formed in this week, as per weekly timeframe chart, after the formation of hanging man type candle pattern of last week. Most importantly Nifty formed unfilled opening weekly gap with this candle. This is rare formation and previously in the last two occasions, such weekly opening upside gaps have been filled subsequently in the next week, by intra-week decline. Hence, there is a possibility of profit booking in the next week.

The short term trend of Nifty is range bound with positive bias. Having placed at the hurdle of 11250, there is a possibility of minor downward correction by early next week. A sustainable move above 11250-11300 levels could pull Nifty towards 11550-600 in the next 1-2 weeks. Important lower support is placed at 11100-11050.

Source : Equity Bulls

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