Technical View - Sep 30, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

The range bound action with volatility continued in the market for the second consecutive session on Wednesday and Nifty closed the day higher by 25 points. A small positive candle was formed with minor upper and lower shadow, which indicates a formation of high wave type candle pattern.

Normally, a formation of such high wave type candle pattern after a reasonable upmove or decline could be considered as a reversal signal. Having formed this pattern in sideways range move doesn't show any significant predictive value.

Nifty is currently placed at the hurdle of up trend line as per the concept of change in polarity around 11250 levels and the market is struggling to sustain above this hurdle in the last two sessions. The overall market breadth was not in favor of bulls on Wednesday, as the broad market indices like mid and small cap segments have ended with minor loss.

After the sharp upmove of 25th and 28th Sept, Nifty shifting into a sideways range movement could apparently be seen as a breather action before further upside. But, the overall Nifty is in a negative pattern like lower tops and bottoms and the significant reversal pattern like bearish engulfing is intact at the swing high of 11794.

Hence, considering this broader negative formation, Nifty showing any sharp upside bounce from here could be a difficult task, but there is a higher possibility of a resumption of sharp weakness from the highs in the near term.

Conclusion: The short term trend of Nifty continues to be range bound. If Nifty fails to show a sustainable upmove above the immediate hurdle of 11300 levels in the next couple of sessions, then there is a possibility of weakness emerging from the highs. Immediate support is placed at 11180 and the downside momentum is expected to pick up below this area.

Source : Equity Bulls

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