Technical View - July 7, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing consistent upmove in the last four sessions, the upside momentum slowed down in the market on Tuesday, as Nifty closed the day higher by 36 points amidst a range movement. A small body of negative candle pattern was formed, which indicates a formation of dragonfly doji type pattern (not a classical one). Normally, such doji patterns at the important swing highs or near key overhead resistances could signal caution for bulls at the highs. Some time, the underlying reverse its trend from higher levels.
Tuesday's candle pattern is not signaling any significant reversal indication as of now, but such signals after the upside breakout of the resistance at 10700 could mean a possibility of minor downward correction ahead.
The positive sequence of higher tops and bottoms continued on the daily chart and Nifty is now placed near the higher top formation of the sequence. But, there is no confirmation of any reversal at the high. Hence, minor downward correction from here could give buying opportunity in the short term.
The short term trend of Nifty continues to be positive. Today's candle formation could indicate a possibility of minor downward correction from this levels or from highs of around 10850-10900. Any downward correction up to 10550-10600 levels expected to be a buy on dips opportunity in the market ahead.