Technical Wrap - May 6, 2022 - HDFC Securities

Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing higher level weakness on Thursday, Nifty shifted in to a decline with range bound action on Friday and closed the day lower by 271 points. After opening with a downside gap of 267 points, the market slipped into further weakness in the early part of the trade. It later showed minor upside recovery from the lows and later shifted into a narrow range movement for rest of the session. The opening downside gap remains unfilled.

A small body candle was formed on the daily chart with almost identical open and close. Technically this pattern indicate a formation of doji type candle pattern after a gap down opening. Nifty seems to have taken support of 16350 levels, before showing intraday consolidation. Normally, a formation of doji after a reasonable weakness alerts regarding trend reversal on the upside. The confirmation by the way of a sustainable close above 16500 levels could open upside bounce in the market.

Nifty as per weekly chart has formed a long bear candle, after the range bound action of the last two weeks. The larger degree of lower tops and bottoms is on the cards and present weekly chart indicate a possibility of new lower bottom formation below 15671 levels in the coming few weeks.

Conclusion: The short term trend of Nifty continues to be negative. Having formed a doji and unfilled opening downside gap signal a possibility of minor upside bounce from here or from the lows in the next 1-2 sessions. Any upside from here could encounter strong resistance around 16650 levels. Eventually Nifty could decline from the highs and reach down to the next support of 16200 levels in the near term.

Source : Equity Bulls

Keywords

TechnicalWrap HDFCSecurities Nifty Sensex