Technical View - Jan 19, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing sharp weakness in the previous couple of sessions, Nifty witnessed an excellent upside bounce on Tuesday and closed the day higher by 239 points. Nifty opened on an upside gap of 90 points, slipped into a minor intraday weakness in the early part of the session. A sustainable upmove has emerged from the early-mid part and that lasted till the end of the session. The opening upside gap remains unfilled and the Nifty closed near the high.

A long bull candle was formed on Tuesday post negative candles of previous two session. This pattern could indicate a sharp comeback of bulls from the lower levels. Most of the losses of the last two sessions have been erased in one session on Tuesday. This signal intact of short term uptrend and one may expect Nifty to challenge the recent all time high of 14653 soon.

The market breadth has turned sharply positive and the broad market segments like midcap 100 and small cap 100 of NSE have closed higher by 2.32% and 1.72% respectively.

The downside breakout of the immediate support like 10 day EMA at 14350 has turned out to be a false downside breakout and the market witnessed a sharp upside bounce in the subsequent session. The Monday's swing low of 14222 could be considered as a new higher bottom of the ongoing bullish pattern-higher highs and higher lows of daily chart.

The symmetrical pattern of 16-18 sessions of consumption (by the way of upmove or range movement) before one day drop is still on. If we consider previous two sessions of weakness to this pattern, then we have a possibility of more upside in the near term.

Conclusion: The sharp comeback of bulls on Tuesday seems to have changed the sentiment of the market and the short term bearish indications have been negated. We expect more upside towards 14655 and higher in the next couple of sessions. Immediate support is placed at 14450.

Source : Equity Bulls

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