Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing a sustainable upmove in the last six sessions, Nifty slipped into a sharp weakness on Friday, on the back drop of steep decline in the IT sector and closed the day lower by 234 points. After opening with a downside gap of 179 points (body gap, not a western gap), the market started to show weakness for better part of the session. Intraday upside recoveries in between have been resulted in to a sell on rise opportunity for the day. Nifty closed the day off the lows and the opening downside gap remains unfilled.
A small negative candle was formed on the daily chart at the lows with upper shadow. Technically, this pattern indicates short term top reversal pattern. But, we need confirmation of follow-through weakness to call it as a downward reversal pattern. As long as the Friday's downside gap remains unfilled at 19965 levels, the chances of further consolidation/weakness in the short term.
Nifty formed a bull candle with long upper shadow on the weekly timeframe chart, which signal presence of stiff resistance at 20K mark. The immediate support of 10 day EMA is at 19650 levels and important 20 day EMA support is at 19425 levels. The said 20 day EMA has been offering supports for the market since past three months. Hence, there is a possibility of an upside bounce in the market on further weakness from here. On the way up, the area of 19850-19900 levels could act as a stiff resistance.