Technical Wrap - Feb 24, 2022 - HDFC Securities

Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After the formation of lower high at 17220 levels as per daily chart on Wednesday, the market witnessed bloodbath on Thursday on the back drop of Russia-Ukraine geo-political crises and Nifty closed the day lower with deep cut of 815 points. After opening with a downside gap of 515 points, the market showed range bound action with weak bias for better part of the session. The selling pressure gained momentum in the mid to later part and the market closed the day lower amid sharp weakness.

A long bear candle was formed on the daily chart with large opening downside gap. Technically, this pattern indicate a decisive downside breakout in the market. The crucial lower support of ascending trend line and 200 day EMA has been broken sharply on the downside around 16800-16700 levels respectively and Nifty closed lower. This also coincide with the downside breakout of triangle type formation.

As per the gap theory, Thursday's large opening downside gap could be considered as a bearish breakaway gap and this gap (around 17027-16705 levels) is unlikely to be filled soon. Hence, the immediate sharp upside recovery or V type recovery is not expected. The downside breakout of triangle pattern as per daily timeframe chart could open the potential downside pattern target of 15900 levels in the near term.

Conclusion:The formation of consistent lower tops, repeated testing of important lower support has eventually witnessed sharp downside breakout for the Nifty. The present decline could be continued for short term and the Nifty could slide down to 15900 levels before showing minor upside bounce from the lows.

Source : Equity Bulls

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TechnicalWrap HDFCSecurities Nifty Sensex