Technical View - Aug 25, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

Uptrend continued in the market for third consecutive sessions on Wednesday and the Nifty registered a new all time high at 16712 levels and showed intraday profit booking from the highs and closed with a gains of 10 points. After opening on a positive note, Nifty made an attempt to move up in the early mid part of the session. Minor selling pressure has emerged from the day's high and the market showed intraday weakness in the afternoon to later part of the session.

A small negative candle was formed on the daily chart with long upper shadow. Technically, this pattern indicate a reversal type formation (not a classical one). But, this needs to be confirmed with reasonable weakness in the subsequent session to call this as a reversal Pattern. Hence, long positions needs to be protected with appropriate stoploss at the highs.

The overall market breadth has continued with positive note and the broad market indices like mid cap and small cap of NSE exchange have closed higher by 0.32% and 0.79% respectively. Presently, the mid cap and small cap sectors are in a negative trend and area forming lower highs and lower lows. Hence, any decline in this segments after the formation of new lower highs could pull market into downward correction.

Conclusion: The short term trend of Nifty continues to be positive. But the pattern formation and the emergence of minor selling from the new all time highs could signal chances of consolidation or some more profit booking in the short term. On any weakness from here, the immediate support of 10 period EMA is placed around 16490 levels. Any upside rally could find resistance at 16720 levels.

Source : Equity Bulls

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