Technical Wrap - August 22, 2022 - HDFC Securities

Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After the formation of bearish engulfing pattern on Friday, Nifty continued with sharp weakness on Monday and closed the day lower by 267 points. After opening with a negative note, the market has shifted into a gradual weakness that continued for the whole session. Minor intraday upside bounces have been sold into and Nifty closed near the lows.

A long bear candle was formed on the daily chart, that has confirmed the false upside breakout of the significant overhead resistance of down sloping trend line at 17900 levels. The long bear candle of the last two sessions signal a faster downside retracement of the last 5-6 sessions of upmove of 10th to 18th Aug. This is negative indication and signal that bears are in a drivers seat.

The positive sequence like higher tops and bottoms is still intact and and present weakness could be in line with the formation of new higher bottom of the sequence. But, a crucial downside reversal from the significant resistance and the formation of negative patterns as per daily and weekly charts signal possibility of some more cut for the market before showing any upside bounce from the lows.

Conclusion: The short-term trend of Nifty continues to be down and the overall bearish chart pattern signal more weakness ahead. The next supports to be watched around 17330 (23.6% fibonacci retracement of June to Aug rising leg) in the next few sessions. On the move below, the next support of 38.2% retracement is placed at 16900 levels. Immediate resistance is at 17600 levels.

Source : Equity Bulls

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TechnicalWrap HDFCSecurities Nifty Sensex