Technical View - Dec 23, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

The upside momentum continued in the market for the third consecutive sessions on Thursday and Nifty closed the day higher by 117 points amidst a range movement. After opening with an upside gap of 111 points, the market made an attempt to move up in the early part of the session. It later shifted into a narrow intraday range movement for the remaining part and finally closed near the highs. The opening upside gap remains unfilled.

A small positive candle was formed on the daily chart with minor upper and lower shadow. Technically, this pattern indicate a formation of doji or spinning top type candle pattern at the highs. Normally, formation of such patterns after a reasonable upmove or at the important hurdle could act as a reversal pattern post confirmation.

Nifty is currently placed at the crucial hurdle of 17150-17200 levels (ascending trend line as per the concept of change in polarity). The negative chart pattern of lower tops and lower bottoms remains intact and Nifty is now placed to form a new lower top of the sequence. We need confirmation of weakness to call this as a lower top reversal.

We observe a formation of three back to back opening upside gaps in the last three sessions, which are unfilled or partially filled. More often, trend gets reversed and the gaps are filled soon after the third gap formation. Hence, the bulls needs to be cautious at the higher levels.

Conclusion: The short term trend of Nifty continues to be positive. But, the market is currently placed at the crucial overhead resistance around 17100-17200 levels. The overall chart pattern indicate higher possibility of selling emerging from near the resistance band in the next 1-2 sessions.

Source : Equity Bulls

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