Technical Wrap - August 20, 2022 - HDFC Securities

Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing a consistent upmove over the last 8 sessions, Nifty slipped into a sharp downward reversal on Friday and closed the day lower by 198 points. After opening with a slightly positive note, the market made an attempt to move up in the early part of the session. A sharp intraday weakness got triggered in the early-mid part and the market later shifted into a decisive weakness for the better part of the session.

A long bear candle was formed on the daily chart, that has engulfed the last two sessions small bull candles. Technically, this pattern signal a formation bearish engulfing pattern after a sharp rise in the Nifty. Normally such patterns are signaling an important top reversals for the underlying.

After showing a lack of strong upside momentum above the crucial overhead resistance of down trend line (descending trend line connected important lower tops) at 17900 levels in the last 2 sessions, the market failed to sustain above the area for long period and bulls have finally surrendered the upside breakout area on Friday by resulting in a false downside breakout.

A negative reversal type candle pattern was formed on the weekly chart that has resulted in a failure of upside breakout of the significant down trend line. This is not a good sign for bulls and one may expect further weakness in the short term.

Conclusion: After showing a sharp upmove in the last few weeks, the Nifty has finally reversed down sharply on Friday and the short term chart pattern signal more weakness ahead. As per the indications of smaller to larger chart pattern, one may expect Nifty to slide down to 17300 levels (23.6% fibonacci retracement of June bottom to Friday's high) in the next 1-2 weeks. Immediate resistance is placed around 17850 levels.

Source : Equity Bulls

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TechnicalWrap HDFCSecurities Nifty Sensex