Technical View - Nov 9, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: Arizona, USA)
The excellent up trended move continued in the market for the fifth consecutive session on Monday and Nifty closed the day higher by 197 points. After opening on an upside gap of 136 points on Monday, Nifty shifted into an intraday consolidation in the early to mid part of the session. Gradual upside recovery has emerged in the later half and Nifty moved up further and closed near the all time high of 12474 levels towards the end. This pattern is exhibiting a sharp upside momentum in the market.
A long bull candle was formed on Monday with unfilled opening upside gap. We observe three back to back opening upside gaps, which are unfilled or partially filled. Hence, Monday's upside gap could be considered as a bullish run away gap and this could indicate more upside in the near term.
Though, Nifty moved up, still there is no indication of any reversal pattern at the highs. Daily 14 period RSI is placed at 69 and this has more room up to 75 levels and higher as per its movement in a bullish trend.
The detailed study of monthly chart indicate a decisive upside breakout of intermediate resistance in the Nifty, after a multiple failed attempts in the last few months. Previously, important tops have been formed with a difference of around 300-350 points higher to the preceding tops. The last all time high (till Friday-6th Nov) was at 12430 of Jan 20. Having moved above this area on Monday, the Nifty is expected to form another top around 12750-12800 levels in the near term.
Conclusion: The near term trend of Nifty continues to be positive and more upside could be in store in the coming sessions. The overall chart pattern (intraday/daily/weekly) indicate more new highs in the coming sessions. The upside targets to be watched around 12750-12800 levels in the next 1-2 weeks.