Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing sharp weakness in the last five sessions, Nifty shifted into a high volatility on Thursday and finally closed the day with minor gains of 13 points. Nifty opened today with a positive note and slipped into weakness from the highs soon after the opening. It later showed upside recovery with wide intraday high and low swings for the day and closed near the open.
A small candle was formed on the daily chart with upper and long lower shadow. Technically, this pattern indicates a formation of long legged doji type candle pattern. Normally, this displays high volatility in the market and such formations post reasonable weakness could be considered as a reversal pattern on the upside after confirmation.
The larger degree lower tops and bottoms continued in the Nifty as per daily chart and Thursday's swing low of 16850 levels could be considered as a new lower bottom of the sequence. Further upside from here could confirm this reversal pattern and that could possibly open a sustainable upside bounce for the short term. A decisive move above the immediate hurdle of 17200 is expected to bring strong bounce in the market ahead. Immediate support is at 16850 levels.