Technical View - Aug 17, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing downside breakout of the range on Friday, Nifty witnessed a sustainable counter trend rally on Monday and closed the the day higher by 68 points. A small positive candle was formed with long lower shadow. Technically, this pattern signal no follow through weakness, after a decline of Friday and this could indicate more upside in the coming sessions.

After the formation of bearish engulfing type of pattern (not a classical one) on Friday, Nifty showing upside bounce today could be a positive signal. A sustainable move above 11366 is expected to negate bearish engulfing pattern completely. Such negation is likely to have more positive impact on the underlying ahead, as per the theory of false downside breakout.

Daily 14 period RSI is placed around upper 60 levels. According its pattern, RSI turning up from 60 levels could mean more further strengthening of upside momentum in the market ahead.

The short term trend of Nifty is at the verge of shifting towards up, after one day weakness. The formation of negative pattern of Friday is at the edge of negation (on the Nifty moving above 11365). Hence, there is a possibility of further upside in the short term before showing any downward correction again from the new swing highs. Immediate support is placed around 11100-11150 and the key overhead resistance is placed at 11350-11380.

Source : Equity Bulls

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