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Market Commentary
Technical View - April 23, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
Posted On : 2021-04-23 17:45:15( TIMEZONE : IST )
After showing a smart upside bounce from the lows on Thursday, Nifty witnessed another sell on rise action on Friday and amidst a volatility and finally closed the day lower by 64 points. Nifty opened on a negative note, showed promising upside recovery from the lows in the early to mid part of the session. The market failed to sustain the highs in the later part and slipped into weakness from the highs and erased morning intraday gains completely and closed just above the day's low.
A small body of positive candle was formed on the daily chart with upper and lower shadow. Technically, this pattern could mean a formation of doji or a high wave type candle pattern. Having this pattern formed at the intraday swing high, one may consider this as a sell on rise action in the market.
The display of lack of strength to sustain the highs continued in the market and we observe consistent lower high formations. The repeated testing of the key lower support is also observed, but the quantum of upside bounces from the key support has diminished day by day. This pattern could eventually result in a decisive downside breakout of the support as well as the high low range (15000-14200 levels).
Nifty on the weekly chart, formed a doji or a high wave type weekly candle, which is placed on the support of weekly 20 EMA around 14200 levels. The negative pattern like lower highs was seen on the weekly chart and Nifty is currently placed at the lower lows, as per week's close. This is not a good sign.
Conclusion: The short term trend of Nifty remains dicey. The inability to show any meaningful upside bounce or failing to sustain the highs post upside bounce could be a cause of concern and this may not be a good sign for bulls. Normally, this action could eventually result in a decisive downside breakout of the support/range in the near term. Any upmove from here is expected to find strong resistance around 14450-14500 levels by next week. A sharp decline below 14200-14150 is likely to open the next lows of 13600 in a quick period of time.
