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Market Commentary
Technical View - Feb 5, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
Posted On : 2021-02-06 10:48:18( TIMEZONE : IST )
The upside momentum with volatility continued in the market for the fifth consecutive sessions on Friday and Nifty closed the day higher by 28 points. After opening on a positive note, Nifty shifted into a range movement with slightly negative bias. The opening upside gap has been filled and Nifty closed the day by erasing most of intraday gains.
A small negative candle was formed on the daily chart with upper and lower shadow at the new all time high of 15014. Technically, this could signal a formation of high wave type candle pattern at the highs. Normally, a formation of high wave could indicate a confusion state of mind among participants. Some time, this also associate with top reversal after the confirmation.
On the contrary side, the Nifty has formed similar type of pattern on 3rd Feb on the daily chart and the market continued its upside momentum after its formation. Presently, the market has sustained above the long term trend line resistance around 14800 levels (top-top, bottom-bottom) and this consolidation movement could eventually result in an upside breakout of the range movement.
Nifty on the weekly chart, formed a long range bull candle (high low range of 1400 points and week on week gains of 9.5%). This bull candle has completely negated the bearish reversal pattern of last week. In past, similar type of negation of weekly reversal pattern has occurred in the early part of October and November 2020 and the Nifty witnessed two weeks of sharp upside bounce during those negations. Hence, there is a possibility of further upside by next week.
Conclusion: The underlying short term trend of Nifty continues to be positive. Present volatility and consolidation movement could eventually result in an upside breakout in the next few sessions. The next upside levels to be watched at 15475, which is 1.618% Fibonacci extension. Immediate support is placed around 14800-14750 levels.
