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

After showing consistent upmove with range bound action in the last three sessions, Nifty witnessed a massive fall on Friday and closed the day lower by 193 points. A small negative candle was formed after gap down opening and with minor upper and lower shadow. This indicate a formation of high wave or doji type candle pattern. The opening downside gap has been filled partially.

Friday's decline in Nifty could signal a reversal of the last three sessions of upmove. The bearish engulfing pattern that formed on 31st March is still active and the market moved below the long bear candle as per intraday, but managed to place just above it.

The crucial multiple lower supports of around 11350-11380 (previous swing low, minor uptrend line and 20 day EMA) has been broken on Friday and Nifty closed just below that area towards the end. Hence, a decisive decline below this area could open more weakness in the near term.

Nifty, on the weekly timeframe chart formed a reversal pattern like bearish engulfing. This is important pattern on the weekly chart, which has not formed in the last few months. The recent upside breakout attempt of significant intermediate uptrend line (intermediate trend line as per change in polarity-weekly/monthly chart) has turned out to be a false downside breakout. this is negative indication.

The short term trend of Nifty has turned down after a minor upside bounce. Any upside bounce attempt from the lower support of 11300-11325 could be a sell on rise opportunity in the near term. A decline below the support could open a broader weakness in the market towards 10800 levels for the next few weeks.

Source : Equity Bulls

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