Technical View - May 20, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing intraday weakness from the highs on Wednesday, the decline got extended on Thursday and Nifty closed the day lower by 124 points. After opening with a minor positive note, the market was not able to sustain the highs in the morning. It later shifted into a range movement with weak bias for the better part of the session. The selling pressure got strengthened towards the end and Nifty closed near the lows.

A long bear candle was formed on the daily chart, that filled the opening upside gap of 18th May completely at 14938. Though, Nifty placed near the said gap support and also previous upside breakout point of 14900 (upper range and previous swing highs), there is no evidence of sustainable buying emerging from near the support. This could be worrying factor for bulls to sustain the highs.

The positive sequence like higher highs and higher lows is intact and and present weakness is expected to find support above 14590 (previous bottom of 14th May) to form a new higher bottom of the pattern. Any failure could open more weakness in the near term. The broad market indices have showed resilience and outperformed the benchmark Nifty on Thursday.

To validate the recent upside breakout of the 15K mark, Nifty needs to close above 14900 levels and show a sustainable upside bounce in the next 1-2 sessions. Otherwise this action could be considered as a false upside breakout attempt.

Conclusion: The weakness of Thursday seems to be in line with the positive chart pattern of the market. If a crucial support of 14900 is broken decisively on the downside, then the bets of upside breakout could be off and more weakness could be set in. A sustainable upmove from the support of 14900 is likely to pull Nifty towards 15140-15200 levels in the short term.

Source : Equity Bulls

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