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Market Commentary
Technical Wrap - March 15, 2022 - HDFC Securities
Posted On : 2022-03-15 22:35:04( TIMEZONE : IST )
Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After making an attempt of decisive upside breakout of the crucial overhead resistance around 16800-17000 levels on Monday, Nifty failed to show follow-through upmove on Tuesday and closed the day lower by 208 points. After opening on a slightly positive note, the market made an attempt to move up in the early part of the session. It failed to sustain the highs and started to show weakness in the mid to later part of the session. The selling pressure got intensified in the afternoon to later part of the session and the Nifty finally closed the day lower with minor upside recovery note.
A long bear candle was formed on the daily chart, that has almost engulfed the previous bull candle on the downside. Technically, this pattern indicate a formation of bearish dark cloud cover type formation at highs. Normally, formation of such dark cloud cover patterns after a reasonable upmove or at the hurdle more often results in reversal pattern post confirmation. Hence, one may expect further weakness in the coming session.
Tuesday's downside reversal from near the important cluster resistance of 16800-17000 levels (uptrend line resistance as per change in polarity, previous multiple swing lows and the opening downside gap of 24th Feb) open up a possibility of false upside breakout. The significance of said cluster resistance could mean more weakness for the market ahead. Having bounced back sharply from a bottom of 15671 levels for more than 1000 Nifty points recently, the odds of higher bottom formation is high.
Conclusion: The sharp downward reversal of Tuesday from near the crucial resistance zone of 16800-17000 indicate chances of further downward correction in the market for short term. The overall chart pattern signal a chances of higher bottom formation around 16400-16250 levels in the next few sessions, before showing another round of upmove.
