Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
A sharp down trended move continued in the market for the second consecutive sessions on Wednesday and Nifty closed the day lower 174 points amidst a range movement. After opening on a slightly positive note, the market slipped into weakness in the early-mid part of the session. Minor upside recovery was seen from a day's low of 17884 levels in the afternoon to later part of the session.
Another long bear candle was formed on the daily chart, which signal a down trend continuation pattern in the market. The formation of long bear candle back to back in the two session indicate a trend reversal down in Nifty after a sustainable upmove of the last 22-23 sessions.
The present weakness could form a new higher bottom of the uptrend of last three weeks. Important daily support as per change in polarity is placed around 17650 levels. Hence, this area could be a buy on dips opportunity for the short term.
Nifty on the weekly chart has started to show weakness after an excellent upmove in the last three weeks. After the negation of bearish lower tops and bottoms pattern as per weekly chart in recent past, the market could find support at the previous upside breakout point of around 17650-17700 levels during its current downward retracement.
Conclusion:The underlying trend of Nifty continues to be down. The short term top reversal has been confirmed at the high of 18350 and the bearish patterns as per daily timeframe chart remains intact. The next downside levels to be watched around 17700-17650 levels and any pullback rally from here could find strong resistance around 18100 levels.