Technical View - April 12, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: Arizona, USA)
After showing minor weakness from the hurdle of 14900 on Friday, Nifty witnessed bloodbath on Monday and closed the day sharply lower by 524 points. After opening on a downside gap of 190 points, Nifty slipped into further weakness in the early to mid part of the session. An attempt of upside recovery in between was met with selling for the day. Nifty finally closed the day with minor upside recovery note.
A long bear candle was formed on the daily chart with minor lower shadow and the opening downside gap remains unfilled. The Nifty has revisited the crucial lower support of previous opening upside gap area (post union budget-21) and also previous swing lows of around 14260 levels. The quantum of upside recovery from near this support is not convincing.
The present chart pattern on the daily chart indicate chances of decisive downside breakout of the crucial lower support and also a broader high low range of the market around 15300-14300 levels. But, the market has failed to show any follow-through weakness in the last few weeks.
Nifty on the weekly chart has moved below the crucial 10 week EMA around 14600 levels and is now holding on another support of 20 week EMA at 14200 levels. The area of 10 w EMA was retained after intra week violation on the downside in past. Hence, a decisive move below 14200 is likely to open a broad based weakness in the market.
Conclusion: The sharp decline of Monday seems to have reversed the short term positive sentiment within a broader range. From the upper range near 15200, the market has reached down to the lower range of 14300-14200 levels. Hence, there is a higher possibility of sharp move on either side. If the sustainable buying emerge from here, the Nifty could show upside bounce up to 14800-14900 in the coming weeks. A decisive move below 14200 is expected to drag Nifty down to 13700-13600 levels by this month.