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

After showing minor upside breakout of the key overhead resistance of 11580-11600 levels on Wednesday, Nifty slipped into weakness on Thursday and closed the day lower by 88 points. A small negative candle was formed with long upper shadow Technically, this pattern indicate a false upside breakout attempt of 11600 resistance.

The formation of Thursday's pattern could signal an emergence of profit booking from the highs, but we are not anticipating any sharp reversal from the highs, as of now. There is an absence of long bear candle formation at the highs and this downward correction is likely to end soon.

After the formation of bearish engulfing type pattern as per daily and weekly chart (31st Aug), the market has spent more time in a broader range movement and gradual upside. Hence, this action could raise doubt over the sharp negative implication of that engulfing pattern. However, the high of that pattern around 11800 is going to be a stiff resistance for the market, after 11600 levels.

Any decline from here, Nifty could find support at 20 day EMA around 11430, but we have seen mild upside bounce from this moving average recently. Nifty also failed to continue with bullish positive sequence of higher tops and bottoms recently, which could be a cause of concern for bulls at the highs.

The short term trend of Nifty seems to have turned into profit booking mode. Unless immediate resistance of 11600 is not broken on the upside we could see broader range movement of ups and downs in the market. Initial support is placed at 11430-11400 levels and a move below this area could drag Nifty down to lower 11200-11180 levels in the near term.

Source : Equity Bulls

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