Technical View - Dec 2, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

Nifty continued its upside momentum amidst a volatility on Wednesday and closed the day on a flat note. After opening on a slightly positive note, Nifty slipped into weakness in the early to mid part of the session. A sharp upside recovery has emerged from a intraday low in the afternoon to later part of the session and Nifty finally closed near the upper end of a range.

A small negative candle was formed on Wednesday with lower shadow, which signal a formation of hanging man type candle pattern. Normally, a formation of hanging man after a reasonable upmove are considered as a warning signal for reversal of trend post confirmation. But, having formed this pattern amidst a range movement, the immediate negative implication could be doubtful.

The negative pattern of bearish engulfing of daily timeframe chart (25th Nov) and doji pattern of last week is still intact as long as the new high of 13150 is protected. A decisive/sustainable move above 13150 is expected to negate both the negative pattern and that could turn sentiment into further bullish.

The display of instability around 13150-13200 levels could mean an emergence of selling pressure at the highs and one big drop in the index is cant be ruled out from the new highs. One needs to be cautious at the highs.

Conclusion: The short term trend of Nifty continues to be positive with range bound action. The market is expected to face stiff resistance around 13150 or slight higher in the coming sessions. A sustainable move above this area could open some more upside for the market. A lack of strength to sustain around 13150 levels is expected to result in another one day sharp drop in the index from the highs, immediate support is now at 12980.

Source : Equity Bulls

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