Technical View - Jan 8, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: Arizona, USA)
After showing choppy trend in the last in the previous couple of session, Nifty witnessed hefty gains on Friday and closed the day higher by 209 points. After opening on a sharp upside gap of 121 points, Nifty continued with upside momentum with range bound action for the better part of Friday's session. Buying got strengthened in the mid to later part and Nifty closed near the upper end of the day.
A reasonable positive candle was formed with gap up opening (body gap, not a western gap) and this could signal an upside breakout of the two days sideways range movement at 14250. This is positive indication.
The immediate resistance of 14310 (1.382% Fibonacci projection taken from Jan 20 high and March 20 low) has been surpassed today and Nifty closed above it. Hence, one may expect further upside in the near term.
Nifty on the weekly chart formed a long bull candle with minor lower shadow, which indicate continuation of sharp up trended movement as per weekly timeframe chart. Some symmetrical chart pattern is unfolding in Nifty weekly timeframe chart. In Oct 20 and Nov 20 months, two weeks of long bull candle was formed before shifting into correction. In the month of Dec 20, Nifty formed a three weekly long bull candle before showing sharp intra-week decline (21st Dec). According to its latest formation, two weeks of long bull candles have already been formed and one may expect one more weekly of long bull candle (by coming week), before showing next set of downward correction.
Conclusion: The near term trend of Nifty continues to be positive. Friday's upside breakout of small range and a formation of symmetrical pattern on the daily/weekly chart could indicate one more weeks of upmove is likely in the market before showing any downward correction from the highs. The next upside targets to be watched at 14600 and immediate support is placed at 14200 levels.