Technical View - July 22, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing a sharp weakness on Tuesday, Nifty witnessed an excellent upside bounce on Thursday and closed the day higher by 191 points. Nifty opened on an upside gap of 104 points, Nifty made an attempt to move up further with range bound action. The intraday decline of mid part has turned out to be a buy on dips opportunity and the Nifty closed near the highs. The opening upside gap remains unfilled.

A long bull candle was formed on the daily chart after a long bear candle of previous session. This pattern indicate a sharp comeback of bulls from the lower levels. After the formation of false upside breakout of the consolidation around 15900 levels, the Nifty displayed a false downside breakout of the trend line and previous swing low support of 15635. This is positive indication.

The market is now placed at the hurdle of opening down gap of 19th July at 15850. This area is going to be a trend decider for the short term. The upside breakout above this gap resistance at 15885 levels could negate the short term negative status of the market and that could open a new all time high above 15962 levels.

As per the pattern of range movement, the false breakouts of either extremes could results in underlying reaching to opposite extremes. The false upside breakout of 15900 has resulted in Nifty reaching a lower range of 15635 in a short period of time. Now the false downside breakout of a lower range at 15635 could possibly pull the market towards 15962 or higher in the near term.

Conclusion: A sharp comeback of bulls on Thursday after a few sessions of decline seems to have changed the negative sentiment of a short term trend. Further sustainable upside above 15880 levels is likely to confirm another attempt of new all-time highs above 15960 levels in the near term. Any failure to sustain the highs could trigger downward correction from the lower top. Immediate support is placed at 15725.

Source : Equity Bulls

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