Technical View - Sep 17, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
2021-09-18 10:39:49 (Time Zone: IST)
After showing a sharp upmove in the last couple of sessions, Nifty witnessed high volatility on Friday and closed the day lower by 44 points. After opening on an upside gap of 80 points, the market surged up in the early-mid part of the session and registered a new all time high of 17792 levels. A massive profit booking has emerged from the new highs and the weakness continued for rest of the session. Minor upside recovery was seen in the later part and the market closed the day by erasing some of intraday loss.
A small negative candle was formed at the highs on the daily chart with long upper shadow. Technically, this pattern signal a formation of dark cloud cover or counter attack bear type candle pattern at the new highs (not a classical one). The follow through weakness is required to confirm this formation as a reversal pattern. Such negative patterns tend to occur during strong up trended moves and more often they get nullified in the subsequent sessions.
The daily 10 period EMA has been providing important clues with regards to a movement of the market. Whenever, the gap of Nifty and 10 day EMA has widened in the recent past, the market has corrected and reached to this moving average to narrow the gap. Having widened the gap of Nifty and the said moving average recently, the intraday weakness of Friday and some more consolidation/minor weakness of next week is likely to narrow the gap. Presently, the support of 10 period EMA is placed at 17400 levels.
A long bull candle was formed on the weekly chart with minor upper shadow. This market action signal that the long term uptrend of Nifty remains intact and minor consolidation or weakness of next week could be a buying opportunity.
Conclusion: The market seems to have started with profit booking and volatility at the new highs. Having moved up sharply in the last few sessions, there is a possibility of consolidation or minor weakness in the coming sessions. Important support is placed at 17400 and there is a possibility of upside bounce from the lower levels.