Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing a fine upside recovery from the lows on Friday, Nifty slipped into weakness from the highs amidst a range movement on Monday and closed the day lower by 61 points. Nifty opened today with an upside gap of 77 points and started to show intraday weakness from the highs soon after the opening. The weakness continued with range bound action in the mid to later part of the session and Nifty closed near the lows.
A long negative candle was formed on the daily charts at the highs, which indicates a counterattack of bulls after the upside bounce of Friday. But, the market is currently moving in a narrow range hence, the predictive value of Monday's pattern could be less.
The triangle pattern in Nifty as per daily time frame chart is intact. After bouncing upwards from the lower end of a triangle at 17800 levels on Thursday/Friday, Nifty reacted down from near the upper end of triangle at 18100 levels on Monday. Hence, one may expect continuation of choppy movement in the short term, before witnessing sharp movement on either side.
Conclusion: The short term trend of Nifty continues to be range bound and the market has shifted into a squeeze type formation of a triangle. Having declined from the upper end of a triangle at 18050-18100 levels on Monday, one may expect further consolidation or upside bounce from the lows in the coming sessions. A decisive move beyond 18100-18150 levels or 17750 levels could confirm breakout in the market on either side. Immediate resistance is at 17980 levels.