Technical View - May 14, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: UTC)
After showing sharp weakness on Wednesday Nifty shifted into a consolidation on Friday and closed the day lower by 18 points. After opening on a positive note on Friday, the market shifted in to a narrow range movement with weak bias for the whole session. Minor intraday upside recovery attempt from the lows has failed to pull the market to stay into positive territory for long period.
A small negative candle was formed on the daily chart with lower shadow on Friday. This pattern was formed beside the long bear candle of Wednesday. This consolidation movement indicate a lack of selling enthusiasm in the market after a short weakness of few sessions. This pattern could eventually result in bulls to making comeback from the lower levels.
After the formation of higher low at 14416 on 3rd May, Nifty forming an intraday low of Friday at 14591 could be considered as a new higher bottom of the sequence. But, this higher bottom needs to be confirmed with upmove in the subsequent sessions (on Monday). Hence, a confirmation of this pattern could open another round of upside in the market and that could retest the resistance zone of around 14900-15000 levels in the near term.
Nifty on the weekly chart, formed a negative candle at the highs, which signal an inability of bulls to sustain the highs. After the upside breakout of down sloping trend line resistance in the previous week, Nifty has slipped into weakness on the weekly chart and is now placed at the previous upside breakout area of around 14650-14700 levels. The market is also above another support of weekly 10 period EMA around 14650 levels. Both of these action indicate a possibility of an upside bounce in the market from the lows in coming sessions.
Conclusion: The short term trend of Nifty is choppy with weak bias. The present market action signal chances of an upside bounce in the coming sessions. The confirmation of higher bottom at 14591 (Friday's Low) is expected to pull the market on upside. The next upper levels to be watched around 14900-15000 in the next one week. Immediate support is placed at 14590.