Technical View - July 21, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The upside momentum continued in the market for the fourth consecutive session on Tuesday and Nifty closed the day with a smart gains of 140 points. A small bullish candle was formed, which indicates an extension of sharp uptrend in the market.
The opening upside gap of Tuesday remains unfilled and this is second back to back opening upside gap in the last two sessions. Normally, formation of three consecutive unfilled opening gaps results in a temporary pause in the underlying trend. But we need confirmation of decline to call as a reversal. Therefore, one more upside gap is expected in the next (Wednesday's) session, before showing any profit booking from the highs.
Nifty is nearing a crucial overhead resistance around 11250 (opening downside gap of 6th March), where the sharp down trend has resumed after the formation of this gap in past. There is a possibility of Nifty showing profit booking from near 11250-350 levels in the next 2-3 sessions.
Nifty as per long term charts like weekly and monthly timeframe is nearing a stiff overhead resistance around 11200-11300 levels and one should be careful about long trading positions at the market highs.
The short term trend of Nifty continues to be positive, The next upside levels to be watched around 11250-11350 levels and this could be achieved in the short term. Immediate support is placed at 11050.