Technical View - Aug 27, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

The upside momentum with choppy movement continued in the market on Thursday and Nifty closed the day higher by 9 points. A small negative candle was formed with minor lower shadow, which signal range bound action in the market at the highs. Nifty made a new swing high of 11617 on Friday.

Smaller degree of higher highs and lows continued on the daily chart and the Nifty is now placed near the higher high of the sequence. But, still there is no indication of any reversal pattern formation at the highs.

Though, Nifty showed an upside breakout of the significant overhead resistance of uptrend line (connected from the important bottom reversals) at 11450-11500 levels as per weekly timeframe chart, but the internal strength of the market during this upside breakout was subdued.

The lack of strength in the upside momentum during upside breakout of the important resistance could more often results in a false upside breakout of the hurdle. Hence, one needs to be careful about any reversal signal at the highs.

The short term trend of Nifty continues to be choppy with positive bias. Similar type of movement is likely to continue in the coming sessions. One needs to be cautious about the longs, as there is a possibility of sharp trigger of downward correction from the highs. Immediate supports to be watched at 11450. The next resistance is placed at 11620-650 levels.

Source : Equity Bulls

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