Technical View - October 5, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

The upside momentum continued in the market for the third consecutive session on Monday, Nifty witnessed a decent gains of 86 points and showed minor profit booking at the highs. The overall market breadth was slightly positive on Monday with mixed trend in the broad market indices like mid and small cap segments.

A small positive candle was formed with gap up opening and with long upper and lower shadow. This pattern indicate a formation of a high wave type candle pattern at this highs. Normally, a formation of high wave after a reasonable rise could signal a confusion state of mind among participants and some time it act as a reversal pattern, after the confirmation. The opening upside gap of Monday, which was a second back to back gap remained unfilled.

Nifty is currently closed just above the resistance of down sloping trend line at 11500 (taken from the swing high of 11794 and connected lower high) and we observe intraday strength in the market around the hurdle. Hence, one may expect further attempt of upside breakout of 11550-11600 levels in the coming sessions.

As long as Nifty placed below 11620, there is a chance of higher levels weakness emerging as per the negative setup of lower highs and lows. A sustainable move above 11620 is expected to negate this bearish setup and could open space for more upside. On such scenario, the market could inch up towards the next resistance of 11800 levels in a quick period of time.

Conclusion: The short term trend of Nifty continues to be positive. The market is expected to encounter crucial hurdle of around 11550-11620 in the short term and there is a possibility of profit booking emerging from the highs. A sustainable move above 11620 is likely to negate the near term negative pattern. Immediate support is placed at 11430.

Source : Equity Bulls

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