Technical View - Oct 6, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

The sharp upside momentum continued in the market on Tuesday and Nifty closed the day higher by 159 points. A long bull candle was formed with upside gap and minor lower shadow. Technically, this pattern could reflect ongoing sharp upside momentum in the market.

The initial overhead resistance of down trend line and also a previous swing high of 16th Sept. has been surpassed on the upside around 11550-11620 levels on Tuesday and Nifty closed above it. We now observe three back to back unfilled opening upside gaps in the last three sessions.

The present upside breakout could be a positive indication and this market action seems to have negated the negative sequential movement of lower highs and lower lows. Hence, this could be positive indication and could open more upside for the short term.

Nifty, as per weekly chart, moved above the significant resistance line (as per the concept of change in polarity) around 11550 levels in this week. Previously, couple of upside breakout attempt of this trend line has failed and Nifty reversed its trend in the subsequent week (early and later Sept 20). Hence, one needs to be careful about the sustainability of the market at highs. From here, Nifty could challenge the next overhead resistance of the high of bearish engulfing pattern at 11800 levels.

Conclusion: The short term trend of Nifty continues to be positive. The market showing upside breakout of 11600 could be a cheering factor for the bulls and one may expect it to reach another resistance at 11800 levels in a short period of time. Immediate support is now placed at 11560.

Source : Equity Bulls

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