Technical View - Feb 23, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: Arizona, USA)
After showing consistent weakness for the last five sessions, Nifty halted its downside momentum on Tuesday and closed the day higher by 32 points. After opening on an upside gap (body gap, not a western gap), the market failed to sustain the intraday highs in the early part and shifted into a weakness amidst a range movement for the better part. The market failed to gather momentum on either side towards the end and closed near the low.
The body of small negative candle was formed with minor lower and upper shadow and this candle was placed beside the long negative candle of Monday. Technically, this pattern indicate temporary halt in the downside momentum and one may expect further weakness from here or from minor highs.
Despite Nifty declining for five sessions, still there is no indication of any reversal pattern at the lows. After the consolidation/range movement, Nifty is expected to slide down further towards the next lower supports of 14350 levels, which coincides at the opening upside gap of 2nd Feb and weekly 10 period EMA.
The medium term uptrend of Nifty remains intact as per weekly timeframe chart and we observe a positive chart pattern like higher tops and bottoms on the weekly chart. In past, the downtrend as per weekly timeframe have consumed for three weeks before showing a sharp upside bounce from the lows. Hence, there is a possibility of further weakness or consolidation movement for the next few sessions of this week and probably we could see a sustainable upside bounce by next week.
Conclusion: The short term trend of Nifty continues to be negative and one may expect some more weakness in the coming sessions. The next lower levels to be watched around 14350-14250 and there is a higher chances of sharp upside bounce emerging from the lows. Immediate resistance is placed at 14850.