Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing upmove with range bound action on Tuesday, Nifty witnessed another decent upside on Wednesday and closed the day with handsome gains of around 156 points. After opening with an upside gap of 115 points, the market showed range bound action with positive bias in the early-mid part of the session. The upside momentum has picked up in the afternoon to later part and Nifty closed near the highs.
A small positive candle was formed on the daily chart with gap up opening. The opening upside gap remains unfilled. Technically, this pattern indicate a continuation of sharp upside momentum in the market. Hence, there is a possibility of another gap up in the coming sessions.
The initial hurdle of 18210 (swing high of 15th Nov 21) has been broken marginally on the upside and Nifty closed just above it. This is positive indication and a sustainable move above this area is likely to pull the market towards the next important overhead resistances of around 18342 and 18600 levels.
The positive chart pattern like higher highs and higher lows is intact on the daily chart and currently, the Nifty is now in line with the formation of new higher high of the sequence. Hence, there is no confirmation of any higher top reversal yet at the highs. Any downward correction from here/highs could be a buy on dips opportunity for the short term. The overall market breadth and broad market indices remains positive.
Conclusion: The short term trend of Nifty continues to be positive. There is a possibility of Nifty reaching another crucial resistances of around 18340 and 18600 levels in the next one week. The formation of unfilled opening upside gap of Wednesday could hint at another 1-2 such upside gaps in the short term. Immediate support is placed at 18090 levels.