Technical Observation - May 20, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing an inside day type candle pattern in the last session, Nifty shifted into a firm upmove today and closed the day higher by 2.11%. A long bull candle was formed today, after a choppy movement of last session. This could indicate an attempt of bulls to make a comeback from the lows.
After the downside breakout of sideways range movement on 18th May, the market failed to show follow-through weakness in the last couple of sessions. The upside bounce of Wednesday could signal a possibility of false downside breakout. This false breakout could only confirm after a sustainable move above 9160 levels. Technically, such false downside breakouts tend to show sharp movement on opposite side (upside in this case).
Minor negative sequence like lower highs and lows continued on the daily chart and further upside from here could have another formation of lower high above 9150 levels.
Conclusion: The short term trend seems to have turned up, but near term negative set up is still intact. As long as the upper area of 9150-9180 is protected, we are unlikely to see any sustainable upmove above the resistance. Immediate support is placed around 8850-8800.