Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing upmove with high volatility on Thursday the Nifty continued with volatile movement on Friday and finally closed the day on a flat note amidst a zigzag type intraday movement. After opening with negative note, the market slipped into weakness soon after the opening. The sustainable upside recovery has emerged from a day's low of 18119 levels and the upside bounce strengthened in the afternoon to later part of the session. The opening downside gap has been filled and Nifty closed near the highs.
A reasonable positive candle was formed at the lows on daily chart with minor upper and lower shadow. Technically, this pattern indicate an emergence of sharp buying on dips. The formation of upper and lower shadow reflects ongoing volatility in the market. The positive chart pattern like higher highs and higher lows of minor degree on the daily chart is continued and Friday's low of 18119 levels could now be considered as a new higher low of the sequence. This is positive indication and one may expect further upside in the near term.
After the formation of 'dragonfly doji' on the daily chart on Thursday, the Nifty reversed the intraday weakness on Friday and also violated the high of doji marginally at 18272 levels. This pattern could eventually negate the bearish implication of doji and that could result in an uptrend continuation pattern.
Nifty on the weekly chart formed long bull candles for three consecutive weeks. Though, Nifty placed at the highs, there is no signs of any tiredness or reversal at the highs as per smaller and larger timeframe charts.
Conclusion: The near term uptrend status of Nifty remains intact and Friday's intraday weakness has not dampen the effort of bulls to sustain the highs. The emergence of sustainable buying from the dips and overall positive daily chart pattern signal next upside target of 18600 levels by next week. Immediate support is placed at 18100 levels.