Technical View - Sep 11, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
Nifty shifted into a narrow range movement on Friday, after showing a sharp upmove on Friday and closed the day higher by 15 points. A small body of positive candle was formed with upper and lower shadow. Technically, this pattern could indicate a formation of high wave type candle pattern.
Normally, such high wave pattern formation, immediately after a reasonable upmove could signal a possibility of profit booking from the highs. A decline in the next session could confirm the reversal pattern.
The opening downside gap of 4th Sept is acting as a key overhead resistance of Nifty around 11500 levels. Though, the market moved above 20 day EMA at 11410, the uptrend line is still acting as a hurdle at 11520 as per the concept of change in polarity. Hence, a sustainable move above 11550 levels could open a renewed buying enthusiasm in the market.
Nifty on the weekly chart formed a small positive candle with minor lower shadow, after the formation of significant bearish engulfing pattern in last week. Normally, such immediate bounce backs are rare post bearish pattern, but the upmove till 11550-11600 can't be ruled out before showing another round of declines from high in the next session.
Conclusion: The upside bounce of Thursday session is holding with range bound action on Friday. Any upside attempt is limited up to 11500-11600 levels for the next week, but there is a higher chances of selling pressure emerging from the highs. Until 11600 level is crossed decisively on the upside, the near term bearish trend status and the initial downside target of 11000 remains intact for the market.