Technical View - Sep 16, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The upside momentum with range bound action continued in the market on Wednesday and Nifty showed a decent upmove of 82 point. A reasonable positive candle was formed and that made a new swing high of 11618 levels.
Today, Nifty moved above the crucial overhead resistance around 11580 and closed higher (previous opening downside gap of 4th Sept and the uptrend line, connecting previous rising lows). This action could bring hopes for bulls and one may expect Nifty to test the next upside levels of 11795 in the near term (high of long bear candle of 31st Aug).
After the formation of bearish engulfing pattern on daily and weekly chart, the Nifty has failed to show any significant decline in the last 8-10 sessions. Today's attempt to move above the key overhead resistance could be another indication to raise doubt on the sharp negative implication post bearish engulfing pattern of daily and weekly chart.
As long as the upper 11800 levels is protected, the bearish engulfing pattern could be intact and Nifty sustaining above 11800 is likely to nullify the bearish impact of that pattern. On such scenario, the sharp upmove could ensue in the market (above 11800). Present, market behavior is indicating an unfolding of such pattern in the near term.
The short term trend of Nifty continues to be positive. Having moved above the hurdle of 11580, one may expect further upside in the short term. The next upside levels to be watched at 11800 and short term support is placed at 11520.