Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing an upmove with volatility on Thursday, Nifty witnessed high volatility of up and down swings on Friday and finally closed the day lower by 142 points. After opening on a positive note, the market showed gradual upmove with range bound movement in the early mid part of the session. Sharp intraday weakness got triggered from a day's high of 17377 levels and the market showed sharp weakness towards the end and closed near the lows.
A long bear candle was formed on the daily chart after higher opening. Technically, this pattern indicate a formation of bearish engulfing type candle pattern after a small rise. But, having placed with in a broader range movement, the significance of this pattern could be less.
Nifty has been showing weak upside bounces after moving up from near the important supports of 16800-16900 levels recently. Having rejected from near the upper range of 17300-17400 levels, the chances of Nifty sliding down to the lower range by next week is higher.
A small body of positive candle was formed on the weekly chart with long upper shadow. After the formation of doji pattern in last week, the market showing inability to sustain the upside could signal more weakness ahead.
Conclusion: The pattern of one day up and down continued in the market within a broad high low range of 17400-16800 levels. The sharp intraday downward reversal of Friday from near upper range could signal probability of Nifty revisiting the lower range of 16900-16800 levels by next week. The possibility of sharp downside breakout of the said range and also a significant lower support of 16800 is getting higher in the near term.