Technical View - July 9, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing sharp weakness on Thursday, Nifty witnessed follow-through decline on Friday amidst a range movement and closed the day lower by 38 points. Nifty opened on a downside gap of 40 points, started with further weakness in the early part of the session. The market later showed upside recovery from the lows, but was not able to pick up the upside momentum in the mid to later part of the session. The opening upside gap has been filled completely.

A small body candle was formed with upper and lower shadow. Technically this pattern could mean a formation of doji type candle pattern (open and close was almost identical). Such patterns after a reasonable declines more often result in upside bounce. This is going to be crucial with regards to short term trend of the market.

The said doji pattern on the daily chart has formed at the support previous swing low at 15635, which is also a halfway support of the long bull candle of 21st June. Hence this pattern could be considered as a double bottom formation on the intraday (60 mins) and on daily chart. This market action is expected to bring hopes for bulls to make a comeback from the lows in the next session.

A small body of negative candle was formed on the weekly chart, beside the similar candle of previous week. This signal ongoing broader range movement in the market.

Conclusion: The short term trend of Nifty continues to be negative. But the formation of doji and double bottom could hint at the possibility of upside bounce in the market in the coming sessions. A session with firm positive close in subsequent session is likely to confirm bullish reversal and that could open upside bounce in the market. All bets are going to off on a decisive decline below the support of 15630 levels. Intraday resistance to be watched at 15780 levels.

Source : Equity Bulls

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