Technical View - Feb 26, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: Arizona, USA)
After showing an upmove with range movement on Thursday, Nifty witnessed bloodbath on Friday and closed the day with sharp intraday loss of around 568 points. After opening on a downside gap of around 209 points, Nifty shifted into a consistent weakness till the mid part of the session. Minor upside recovery of mid to later part has turned into a sell on rise and Nifty slipped further towards the end to close near the lows. The opening downside gap remains unfilled.
A long bear candle was formed, that moved below the immediate support of 14635 levels and closed lower. Hence the intraday high of Thursday at 15176 could be considered as a new lower top formation. This is for first time that Nifty formed a lower top in the last few months, which is negative indication. Next lower supports to be watched at 14335, which is an opening upside gap of 2nd Feb-upside gap formed after the union budget.
Nifty on the weekly chart, formed a reasonable negative candle for the second consecutive week. The weakness after the formation of bearish engulfing type pattern of previous week. The medium term trend of the market remains intact and we observe a larger positive sequence like higher tops and bottoms in Nifty as per weekly timeframe chart. Present, weakness in the market could be in line with the new higher bottom of the sequence. But the higher bottom formation needs to be confirmed.
The weekly 10 period EMA has been offering support for the market since October 2020, as per weekly chart. In the last three occasions Nifty halted its weakness and showed sharp upside bounce from near this support (in early Nov 20, Later Dec 20 and later Feb 21) or mildly violating the support. Presently, Nifty sliding down towards this support at 14345 and one may look for the opportunity of another upside bounce unfolding from the lows.
Conclusion: The recent upside bounce of the last two sessions has been negated sharply on Friday and the short term trend has turned down. One may expect further slide down towards the next crucial supports of around 14350-14300 levels in the coming few sessions, before showing any possibility of an upside bounce. Upside rise from here could find stiff resistance at 14640.