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Market Commentary
Technical View - Oct 1, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
Posted On : 2020-10-01 17:10:33( TIMEZONE : IST )
Nifty witnessed sharp upside bounce on Thursday, after showing a range movement in the last couple of sessions and closed the day on a hefty gains of 169 points. A long bull candle was formed with gap up opening and the opening upside gap remains unfilled. This pattern indicate upside breakout of the range movement.
We observe back to back unfilled opening upside gaps on 28th Sept and 1st Oct, which is indicating positive bias for the market ahead. If Thursday's gap remains unfilled at 11260 in the next 1-2 sessions, then the present upside bounce could continues for some more period.
The recent negative sequence of lower highs and lows remains intact on the daily chart and present upmove could be in line with the formation of new lower top. But, still there is no confirmation of any reversal pattern yet at the highs. As long as Nifty remains below 11618 levels, there is a possibility of weakness emerging from the highs.
Nifty is now moving towards the next overhead resistance around 11500-11550 (down sloping trend line, connected from the lower highs). This could be a last resort for bears to check the bulls in a negative pattern. A sustainable move above 11620 could negate the bearish implication and that could pull the market towards 11800 and higher in the near term.
Nifty formed a long bull candle on the weekly chart, after the formation of long bear candle of last week. Technically this could be a sharp comeback of bulls from the lows. As long as Nifty stays below the strong weekly trend line hurdle of 11550-11600 levels, there is a chance of sell on rise opportunity.
Conclusion: The continuation of upside momentum after a minor pause on Thursday open more upside in the near term. Now, the crucial upside levels to be watched to maintain broader negative bias is around 11550-11650 levels. There is a higher possibility of profit booking emerging from the highs by next week. Immediate supports to be watched at 11260.