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Market Commentary
Technical View - Oct 30, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
Posted On : 2020-10-30 20:50:29( TIMEZONE : IST )
The sideways range movement with negative bias continued in Nifty for the second consecutive session on Friday and the market closed the day lower by 28 points. A small negative candle was formed with upper and lower shadow, which indicate a volatility with weak bias in the market.
After showing upmove in the early part of Friday's session, Nifty failed to sustain the gains at the hurdle of 11750 levels and slipped into weakness in the mid part of the session. A smart upside recovery has emerged from the lows of 11535 and Nifty erased most of intraday loss towards the end and closed near the upper end of a range.
We observe back to back weakness in the last two sessions, post the formation of long bear candle of 28th Oct. After the downside range breakout recently, the Nifty struggled to sustain above the hurdle of the range breakout area at 11750 levels, as per the concept of change in polarity. The formation of lower highs of a smaller swing on the daily chart could signal a possibility of further weakness below 11600 levels again.
Nifty on the weekly chart formed a long bear candle and placed at the edge of moving below the significant trend line support at 11600 levels, as per change in polarity. After the upside breakout of this trend line in the early part of October, the Nifty failed to show any meaningful follow-through upmove later, as it moved in a broader sideways range with weak bias. Hence, this pattern could signal a chances of Nifty showing further weakness in the next week, before showing any meaningful upside bounce.
Conclusion: The short term trend of Nifty continues to be range bound with weak bias. The lower support of 11600-11550 is going to be crucial for the bulls to hold on their defense. A decisive move below this support is expected to open further weakness down to 11200 levels in the next few weeks. Immediate resistance to be watched for the next week is at 11750-11800 levels.
