Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The sharp weakness continued in the market for the second consecutive sessions on Thursday and Nifty closed the day lower by 159 points. After opening with a downside gap of 61 points, the Nifty continued with down trend amidst a range bound action. Minor intraday upside recoveries in between have been used as a sell on rise opportunity. The opening downside gap remains unfilled.
A long bear candle was formed on the daily chart with unfilled opening down gap, which is back to back for the last two sessions. Technically, whenever the underlying shows sharp reversals with more gap up or gap down moves, such trend more often continues for longer period. Having formed the top reversal pattern at 20222 levels and the recent gap down openings indicates more weakness ahead for the market.
The next important supports to be watched around 19550 levels, which is weekly 10 period EMA. Minor upside bounce is be expected from the supports, but the said bounce could be a sell on rise opportunity.