Technical View - Jan 7, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing weakness with high volatility on Wednesday, Nifty continued to show consolidation movement on Thursday and closed the day on minor negative note. After opening on a opening upside gap of 107 points on Thursday, the market has started with gradual weakness with range movement since opening. The weakness got intensified in the afternoon to later part of the session and Nifty erased entire day's gain and closed on a minor weak note. The opening upside gap has been filled completely.

A negative candle was formed after opening at the new highs (14256) and this candle is placed beside the similar negative candle of Wednesday. Technically, this pattern could indicate a range movement with weak bias. We observe emergence of intraday profit booking at the new highs.

The overall market breadth continues to be positive (positive advance decline ratio) and broader market indices like midcap 100 and small cap 100 of NSE exchange have outperformed the benchmark index and closed higher by 1.45% and 1.37% respectively. This is positive indication.

Though Nifty showed higher levels weakness recently, the overall short term trend has become choppy. Despite placed at the new all time highs of 14256, there is no indication of any reversal pattern unfolding at the highs. Hence, this could mean intact of near term uptrend status of the market and present range movement could eventually result in an upside breakout.

Nifty is consistently sustaining above 10 day EMA (the moving average support is now at 14000) on the daily chart and this area is going to be important for the near term uptrend continuation.

Conclusion: The short term trend of Nifty has turned out to be a choppy and this range bound movement is expected to continue for the next session. Immediate resistance is placed at 14300 and short term support for the Nifty is at 14000 levels. A sustainable move above 14300 could open further upside momentum in the market.

Source : Equity Bulls

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