Technical View - Oct 13, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing minor weakness from the swing highs On Monday, Nifty shifted into a consolidation with weak bias on Tuesday and closed the day on a flat note. A doji type candle pattern was formed (identical open and close), which was formed beside the minor negative candle of Monday.
Normally, a formation of doji after a reasonable upmoe or down move could be considered as a warning signal for trend reversal. Having formed this pattern beside the last negative candle could mean less predictive value for this doji pattern.
The uptrend of the last 7-8 sessions is intact and the consolidation movement of the last couple of sessions could be considered as a corrective move of the said uptrend. This signal a lack of selling participation at the swing highs, post sharp upmove. Similar consolidation pattern was formed in past during later part of Sept (29-30 Sept) and eventually resulted in an uptrend continuation pattern.
Weak market breadth has been a cause of concern for the benchmark Nifty over the last few sessions. We observe a continuous underperformance of the broad market segments like mid and small caps, while benchmark index moved up. This is not a good sign and we expect market breadth to pick up its upside momentum soon.
Conclusion: The short term trend of Nifty seems to be taking breather by moving in a range. The near term uptrend status of the market remains intact. The market is expected to resume its uptrend after the consolidation movement in the next 1-2 sessions. The upside target is intact around 12150-12250 levels. Immediate support is placed at 11850.