Technical View - June 18, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: UTC)
After showing weakness in the last couple of sessions, Nifty witnessed high volatility of larger intraday up and down swings on Friday and the market closed the day with minor loss of 08 points. After opening on a positive note, Nifty failed to sustain the highs after opening and witnessed massive intraday sell off in the early-mid part of the trade. An excellent upside recovery has emerged from the day's low of 15450 levels and the upside bounce continued till the end. The Nifty showed a huge high-low range of around 310 points in a day.
A small negative candle was formed on the daily chart with long lower shadow. Technically, this action indicate a sharp upside recovery in the market. This candle pattern seems to be a hammer or a hanging man type formation, but they are wrongly placed to assert any predictive value. Hence, this upside recovery could be positive signal for the short term.
After showing one day declines during uptrend over the last one month, the market seems to have completed a decent correction by reaching a swing low of 15450 on Friday (around 450 points downward correction from the all-time highs of 15901). The crucial supports of 20 day EMA has been regained after intraday breach on the downside and the previous support of 10 day EMA is now left to be regained. This is positive indication and one may expect further up move in the coming sessions.
Conclusion: The short term trend of Nifty is very volatile. The short term downward correction seems to have completed and the Friday's low of 15450 could be an important support as of now. This swing low is expected to be a new higher bottom formation of larger degree, post confirmation. Hence, Nifty sustaining above 15700 levels by next week is likely to open a way for another new all-time highs-above 15901.