Technical View - Aug 20, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing higher level weakness on Wednesday, Nifty slipped into declines amidst volatility on Friday and closed the day lower by 118 points. After opening on a downside gap of 186 points, Nifty made an attempt to show upside recovery from the lows in the early part of the session. The selling pressure has emerged from the intraday highs and the market slipped into weakness again in the mid to later part of the session and finally closed near the lows. The opening downside gap remains partially filled.

A small positive candle was formed on the daily chart with long upper shadow. Technically this pattern indicate a short term downside reversal in the market and Friday's unfilled opening downside gap could be considered as a bearish breakaway gap. This could mean some more weakness for the market ahead.

Nifty is currently placed at the support of 10 day EMA at 16400 levels, which has offered base for the market recently. On the move below this area, another crucial support of daily 20 period EMA is placed around 16240, where the market is expected to find support in the short term.

Nifty on the weekly chart, formed a small negative candle with long upper shadow. Technically, this pattern signal an emergence of profit booking from the highs. Previously, such minor reversal on the weekly chart was resulted in a broader high low range movement. Hence one may expect such market action in the coming weeks.

Conclusion: The short term uptrend of Nifty seems to have reversed and one may expect some more weakness in the coming sessions. The next lower area of 6250-16300 levels could offer support for the market in the early next week and the market could bounce back from the lows by next week. On the higher side, intraday resistance is placed at 16500-16550 levels.

Source : Equity Bulls

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