Technical View - May 18, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: UTC)
Nifty continued with an excellent upside momentum on Tuesday, after showing a sharp upmove on Monday and closed the day with smart gains of around 184 points. After opening on an upside gap of around 144 points, the market continued to show upside momentum amidst a range movement for the entire session. Minor intraday dips were used to move up and the market closed near the highs. The opening upside gap remains unfilled.
A small positive candle was formed with sharp opening upside gap with minor upper and lower shadow. Technically, this pattern indicate a display of sharp upside momentum in the market. Nifty has challenged the key upside resistance and also the upper area of broader higher range around 15000 levels and closed higher.
But, the bulls needs to be careful at the highs, as such huge opening upside gaps and such formation of high wave type candle near the crucial overhead resistances are filled with higher levels weakness. Previously, for few occasions the last opening upside gaps with high wave candles at the highs have been filled with weakness in the subsequent sessions. After the formation of two back to back upside gaps recently, the market needs to sustain the highs with third such gap in the next session or else minor downward correction could be set in from the highs.
The positive chart pattern of smaller degree like higher top and bottom is intact and Tuesday's swing high of 15137 could be considered as a new higher top of the sequence. But, we need confirmation of reversal from the highs to call this as a higher top reversal pattern.
Conclusion: The short term trend of Nifty continues to be positive. The unfilled opening upside gap and a formation of small positive candle could hint at a possibility of profit booking emerging from the highs. Hence, bulls needs to be cautious at the swing highs. Nifty not showing any profit booking in the next couple of sessions could open the next upside levels of 15450-15500 in the near term. Immediate support is placed at 15000 levels.