Technical View - Sep 14, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing upmove from the lows recently, Nifty struggled to sustain the gains on Monday and closed the day lower by 24 points amidst high volatility. A long bear candle was formed with minor lower shadow.
Technically, this indicate a formation of bearish dark cloud cover or counter attack bear candle pattern at the highs. Normally, a formation of such patterns after a reasonable upmove or near the crucial overhead resistance could signal probability of profit booking from the highs or a reversal pattern.
The key upside area of 11500-11550 (previous swing high and the opening downside gap of 4th Sept) has acted as a strong overhead resistance and led to a sharp intraday weakness from the highs. This is negative indication.
After the formation of larger positive sequence like higher tops and bottoms till later part of Aug, Nifty seems to have shifted into a minor negative sequence like lower highs and lows over the last 10 sessions. Today's swing high of 11568 could be considered as a new lower high of the sequence. Hence, one may expect further weakness in the next session.
The important negative candlestick pattern like bearish engulfing is still intact on the daily and weekly chart. Hence, one may remain with bearish view in Nifty until the high of 11794 is breached decisively on the upside.
The short term trend of Nifty seems to be weakening at the key overhead resistance and one may expect further weakness in the coming session. The near term negative trend status is remain intact for the market. Immediate downside levels to be watched at 11280, which could be achieved by this or next week. Upside resistance is placed at 11568.