Technical View - Aug 5, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

Nifty witnessed high volatility at the new all-time high at 16349 on Thursday and finally closed the day higher by 35 points amidst a zig zag movement. After opening on a positive note, the market slipped into minor weakness in the early part of the session. It later witnessed a sustainable up move in the early mid part and registered a new all-time high at 16349 levels and started to show weakness from the highs in the afternoon to later part of the session.

A small positive candle was formed with upper and lower shadow. Technically, this pattern indicate a formation of doji type candle pattern (not a classical one) at the all-time highs. Technically, such formation of doji patterns after the reasonable up move could be considered as a confusion among participants at the crucial juncture. Some time, such movement results in reversal or downward correction from the highs. Having moved up sharply during upside breakout, the odds of minor profit booking from the highs is likely.

Normally, after a sharp technical upside breakout of important range movement, the underlying more often shows consolidation/minor weakness from the swing highs, towards its upside breakout point, before showing upside bounce once again. Such action more often results in uptrend continuation pattern after a dip.

Conclusion: The short term trend of Nifty continues to be positive. Having moved up sharply in the last few sessions, there is possibility of consolidation or minor downward correction from the highs near to its breakout points support around 16000-16100 as per the concept of change in polarity. This anticipation is evident after a formation of doji pattern on Thursday at the highs. Such anticipated decline could be a buy on dips opportunity in the market as per the concept of change in polarity.

Source : Equity Bulls

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