Technical View - Aug 31, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing a sharp upside breakout of small range movement on Monday, the similar uptrend continued in the Nifty on Tuesday and the market closed the day higher by 201 points. Nifty opened on a positive note, made an attempt to move up in the early part of the session. Minor intraday dips have been bought into and the market closed near the highs. A new all time high was formed at 17153 levels.

A long bull candle was formed on the daily chart, which is back to back for the second consecutive sessions. Technically, this pattern indicate a sharp upside breakout in the market after a small range movement. Normally, such violent upmoves in the short term more often results in a minor consolidation or breather patterns, before showing further upside momentum.

Though, Nifty moved up by 1.18% on Tuesday, the overall market breadth was not conducive, as the broad market indices like mid and small cap segments of NSE have managed to closed higher by 0.62% and 0.68% respectively.

Nifty on a monthly chart formed a long range bull candle for August at monthly close, after a narrow range movement in the month of June and July-21. This monthly pattern could signal a decisive upside breakout of the range. As happened in the past the consolidation pattern or minor weakness could emerge from the highs of 17300 levels in the next month.

Conclusion: The short term trend of Nifty is sharply up and still there is no indication of any tiredness at the higher levels. Having moved up by around 450 points in the last two sessions, there is a higher possibility of consolidation or minor profit booking from the highs in the short term. Hence, one may expect 17200-17300 to be a crucial overhead resistance band for this week. Immediate support is placed at 17010 levels.

Source : Equity Bulls

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