Technical Wrap - April 6, 2022 - HDFC Securities

Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing higher level weakness on Tuesday, Nifty continued with follow-through weakness amidst range bound action on Wednesday and closed the day lower by 149 points. After opening with a downside gap of 115 points, the market continued with decline in the early-mid part of the session. Intraday upside bounce of mid part has failed to sustain and the Nifty closed near the lows. The opening downside gap has been filled partially.

A small negative candle was formed on the daily chart with minor upper shadow. This pattern confirms a short term top reversal at the swing high of 18114 levels and a beginning of downward correction in the market. The overhead resistance of down sloping trend line seems to have acted as a crucial hurdle for the market and resulted in a trend reversal down. Presently, Nifty is placed above the previous upside gap of 4th April at 17800 levels.

Interestingly, any gap down opening on Thursday and if that gap is not filled during intraday pullback rally, then that could signal a formation of crucial 'bearish island reversal' pattern as per daily timeframe chart. On such circumstance, the Nifty could even slide down to 17K mark.

Conclusion:The short term trend of Nifty seems to have reversed down and the downward correction is on the way. There is a possibility of further weakness in the market down to 17600 levels in the next few sessions. Confirmation of bearish Island Reversal could open more downside for the market.

Source : Equity Bulls

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TechnicalWrap HDFCSecurities Nifty Sensex BankNifty