Technical View - Oct 14, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
2021-10-14 22:20:21 (Time Zone: IST)
The sharp upside momentum continued in the market on Thursday and Nifty closed the day higher by 176 points. After opening with an upside gap of 111 points, the market showed range bound movement with positive bias for better part of the session. Intraday dip of mid part was used as buy on dips opportunity. A new all time high was registered at 18350 levels and the Nifty closed near the highs. The opening upside gap remains unfilled.
Another long bull candle was formed on the daily chart with gap up opening. We observe back to back two opening upside gaps in the last two sessions. This displays a sharp upside momentum, which is unfolding in the market.
Normally, three back to back upgaps are formed in a strong up trended movement before showing any downward correction from the highs. Hence, there is a higher chances of another opening upside gap on Monday before witnessing any profit booking from the higher levels.
The daily 10 period EMA on the daily chart has been offering support for the Nifty since past many weeks. Widening of gaps between Nifty and 10 day EMA in past has resulted in a downward correction in the market to reduce the gap and to drag Nifty towards this moving average support. Having moved away from this moving average now, the odds of another round of profit booking could be higher in the short term.
Conclusion: The short term trend of Nifty continues to be positive. Though, Nifty closed near the all time highs, still there is no indication of any reversal formation at the new highs. As per the theory of higher tops and bottoms, one may expect profit booking in the Nifty from near 18500-18600 levels by next week. Immediate support is placed at 18265 levels.