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Market Commentary
Technical Wrap - Jan 27, 2022 - HDFC Securities
Posted On : 2022-01-27 21:32:00( TIMEZONE : IST )
Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing a sharp intraday upside recovery from the lows on Tuesday, Nifty displayed deep cut with high volatility on Thursday and finally closed the day lower by 167 points. After opening with a downside gap of 215 points (body gap, not a western gap), the market shifted into a gradual decline with range bound action till the mid part of the session. A sustainable buying has emerged from a day's low of 16866 levels and the market shifted into an upside recovery in the mid to later part of the session. The opening downside gap has been filled partially.
A small body of positive candle was formed on the daily chart with upper and lower shadow. Technically, this pattern indicate a formation of high wave type candle pattern at the lows and this reflects a high volatility in the market. Normally, such high wave formation after a reasonable declines or near the important supports are considered as a bottom reversal post confirmations. Hence, a follow-through upmove from here could open a sustainable upside bounce for the short term.
The crucial lower support of ascending trend line as per change in polarity principle remains intact around 16800-16900 levels and the Nifty retested this support during Thursday's weakness and formed a higher low. The market has witnessed a decisive upside bounce from near this trend line support in the recent past. Hence, a sustainability of this support could be crucial to expect a reasonable upside bounce in the market ahead.
Conclusion: The market is making an attempt to reverse its down trend and still there is no confirmation of any bottom reversal forming at the lows. The formation of candle pattern with long lower shadows and the presence of crucial support around 16800-16900 levels are indicating a chances of a sustainable upside bounce from here or from the lows. Immediate resistance is placed at 17300 levels.