Technical View - August 4, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing sharp weakness in the last four sessions, Nifty witnessed an excellent upside bounce on Tuesday mainly on the back of leading contribution by the Reliance Industries and the market finally closed the day decently higher by 203 points. A long bull candle was formed, which signal a strong comeback of bulls from the key lower support of 10900 levels.

Tuesday's sharp upside bounce could be a reflection of significance of support of 200 day simple moving average and also previous swing high of mid part of July as per the concept of change in polarity.

The positive sequential movements like higher tops and bottoms continued on the daily chart and Monday's swing low of 10882 could now be considered as a new higher bottom of the sequence. As per this pattern, Nifty has a potential of moving towards its recent swing high of 11340 in the near term. We need follow-through upmove to confirm this pattern.

Tuesday's sharp upmove in the benchmark Nifty seems to have reversed short term negative sentiment in the market. Now, the key lows of 10900 is going to be a crucial support for the market for the near term. Further sustainable upmove in the next 1-2 sessions is likely to bring bulls back into action and Nifty could race towards the recent swing high of 11340 levels in the next 3-5 sessions. Any intra-week decline from the highs could find base around 11000 levels.

Source : Equity Bulls

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