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Market Commentary
Technical Wrap - Jan 21, 2022 - HDFC Securities
Posted On : 2022-01-23 07:56:35( TIMEZONE : IST )
Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The sharp down trend continued in the market for the forth consecutive sessions on Friday and Nifty closed the day lower 139 points amidst high volatility. After opening with a downside gap of 144 points, the market showed further weakness in the early part of the session. An attempt of upside recovery from the lows has failed to sustain in the afternoon and the market later showed sharp intraday swing movements of up and down in the second half of the session.
A small body candle was formed on the daily chart with upper and lower shadow. Technically, this formation indicate a formation of doji or high wave type candle pattern (not a classical one). This pattern indicate a heightened volatility in the market at the lows. Normally, such doji pattern formations after a reasonable upmove or down move are considered as an impending signal for trend reversal. Having declined sharply in the last few sessions, one may expect chances of upside bounce in the short term.
Nifty on the weekly chart formed a long negative candle this week, after a fine upside bounce of the last 3-4 weeks. The crucial lower supports as per change in polarity has been violated marginally around 17700-17650 levels as per weekly close.
After the negation of larger negative sequence like lower tops and bottoms as per daily/weekly chart, the Nifty retracing down to the previous negation point of 17600 levels could be crucial for the uptrend to resume from the lower supports in the coming weeks.
Conclusion: The short term trend of Nifty continues to be weak with high volatility. Placement of support around 17600-17500 levels and a formation of doji at the swing lows on Friday pointing towards a possibility of an upside bounce from here or slightly lows. The confirmation of bottom reversal is likely to indicate a quantum of upside bounce from here. Immediate hurdle is placed at 17800 levels.
