Technical Observation - May 6, 2020 - Nagaraj Shetti - Technical Analyst, HDFC securities

Technical Observation: NIFTY

After witnessing sharp weakness on 4th May (Monday), Nifty shifted into a mixed trend with range bound action in the last couple of sessions. A small positive candle was formed on Wednesday (small candle with upper and lower shadow-a high wave pattern). Technically, this could signal range bound action. The last two session's candle pattern also signals lack of strength in the downside momentum.

The formation of bearish patterns like bearish island reversal (of 4th May) and the false upside breakout of the rising wedge (converging trend line breakout) could signal weak outlook for the market ahead. The downside pattern target for bearish island reversal is at 8910 levels.

Conclusion:

The short term trend of Nifty is slightly positive with range bound action. There is a possibility of minor upside bounce in the next 1-2 sessions, maximum up to 9450-9550 levels.

Eventually, Nifty could fail to sustain the highs and one may expect higher levels weakness soon in the market. The downside levels to be watched for the next one week is at 8900 and lower. Hence, one may adopt sell on rise strategy in the market.

Source : Equity Bulls

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