Technical View - Oct 7, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

The upside momentum continued in the market for the fifth consecutive session on Wednesday and Nifty closed the day decently higher by 76 points. A long positive candle was formed with minor lower shadow. Technically, this pattern indicate a continuation of upside momentum in the market.

Nifty sustained higher after the upside breakout of initial hurdle at 11550 and is now closed to move above the next important swing high of 11795. This could be an indication of strength of bulls to surpass the hurdles. Hence, the upper hurdle of 11800 could be taken out soon.

Nifty sustaining above the next key reversal pattern of bearish engulfing on the daily and weekly chart at 11795 is expected to be an important signal of negation of bearish pattern. Normally, such negations tend to act as uptrend continuation pattern. On such scenario, the market could reach up to upper 12250 levels in a short period of time.

Nifty on the weekly timeframe chart has moved above the significant trend line resistance(as per the concept of change in polarity) of 11600 in this week and trading higher. Previously, the couple of upside breakout attempt of this hurdle was failed and Nifty reversed down sharply in the subsequent weeks (early and later Sept 20). This could be a last resort for bears to drag the index down from the highs. But, a sustainable upmove by next week could have further positive impact.

Conclusion: The short term trend of Nifty continues to be positive and more upside could be in store. There is a possibility of Nifty surpassing 11800 levels in the short term. Such positive event is expected to pull the market towards 12150-12250 levels by next week. Immediate support is placed at 11620.

Source : Equity Bulls

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