Technical View - Oct 20, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

Nifty continued to show upside momentum on Tuesday for the third consecutive sessions and closed the day higher by 23 points. A small positive candle was formed with minor upper shadow, which indicates sideways range movement with positive bias in the market.

The overall market breadth was slightly positive with minor gains registered in the broad market indices like mid and small cap segments on Tuesday. Presently, Nifty paced at the minor hurdle of mid part of long bear candle of 15th Aug at 11900 levels and a sustainable move above this area could open another key overhead resistance around 12K mark.

After the formation of bearish engulfing pattern on 15th Oct, the market showing upside bounce in the last three sessions could be a positive indication for the short term. Unless, the high of that engulfing pattern is not surpassed above 12025, the strong upside momentum could be ruled out.

The larger degree positive pattern like higher tops and bottoms is visible on Nifty as per weekly timeframe chart. Though, Nifty is now placed near the higher highs, still there is no confirmation of any higher top reversal yet at the highs, as per weekly chart. Hence, we are unlikely to see any sharp weakness beginning from here. Any minor declines/consolidation could be a buy on dips opportunity for the short term.

Conclusion: The short term uptrend of Nifty remains intact with range bound action. The market could make an attempt to retest the crucial upper resistance of around 12000-12050 levels in the next few sessions. Immediate supports to be watched at 11780.

Source : Equity Bulls

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