Technical View - Feb 8, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing high wave type confusing candle pattern at the highs on Friday, Nifty continued with sharp trended upmove on Monday and closed the day higher by 191 points. After opening on an upside gap of 140 points, the market has shifted into further upside amidst a range movement. Minor intraday weakness in between was used as a buy on dips for the day. A new all time high was formed at 15159 and Nifty closed near the highs. The opening upside gap remains unfilled.

A reasonable positive candle was formed on the daily chart with gap up opening. This is second unfilled gap in a span of five sessions. The formation of previous gap of 2nd Feb could be considered as a bullish breakaway gap and present gap (of Monday) is expected to be a bullish runaway gap, provided this gap remains unfilled for the next couple of sessions. On the occurrence of such action, the market could show more upside in the near term.

Though, Nifty placed at the all time high, there is no indication of any reversal pattern forming at the highs. The market has completely negated bearish reversal pattern of previous week on the weekly chart and closed higher. As happened in the past, one may expect a formation of another reasonable bull candle in this week (weekly chart).

The long term resistance of trend line (top to top/ bottom to bottom trend line as per monthly timeframe chart) has been violated on the upside around 14800-14900 levels and Nifty closed above this area so far.

Conclusion: The underlying trend of Nifty continues to be positive and one may expect further upside in the short term. the next upside levels to be watched around 15500, which is at 1.618% fibonacci extension (connected from Jan 20 top to March 20 bottom). This could be achieved in the next one week. Immediate support is placed at 14960.

Source : Equity Bulls

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