Technical View - Aug 12, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After the formation of doji type pattern in the previous couple of sessions, Nifty slipped into weakness in the early part of Wednesday's session, but shifted in to a sustainable upside recovery for the better part and closed the day with upside recovery note.

Nifty closed the day lower by 14 points lower on Wednesday at 11308.40. A small body of positive candle was formed with minor lower shadow at the lows. Technically, this signal formation of high wave type pattern and this indicate that bulls are holding their defense. This choppy movement below the hurdle of previous swing high could eventually result in a retesting of recent swing highs (11373) or scale higher.

Present range bound action of the last 3-4 sessions could mean that there is a possibility of one more upside breakout attempt at 11375-11400 levels in the short term, before witnessing any reversal pattern at the highs. The broad market indices and banking sectors are continues to outperform in the market.

The long term charts of Nifty like weekly and monthly shows presence of strong overhead resistance around 11400-11500 as per the concept of change in polarity. Hence, any upside breakout attempt above 11400 needs to be careful with regards to an important trend reversal.

The short term uptrend status remains intact, still there is no evidence of reversal pattern at the highs. Positional longs needs to be protected with stoploss of 11125. On the upside the area of 11400-11500 could act as a key overhead resistance in the near term.

Source : Equity Bulls

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