Below is the Technical Quote On Today`s Market Performance by Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The down trend continued in the market for the sixth consecutive session on Friday, as Nifty witnessed high volatility and closed the day lower by 182 points. After opening on an upside gap of 128 points, the market started to show weakness amidst a range movement till afternoon. Upside recovery attempt of mid was failed and the weakness got intensified towards the end. The opening upside gap has been filled completely.
A long negative candle was formed on the daily chart, that has engulfed the small positive candle of last session completely (positive sentiment raised after a doji pattern of Thursday has been negated on Friday). Technically, this action could signal a formation of last engulfing pattern (bearish engulfing at the lows-some time act as bullish reversal post confirmation). As we are near the significant top reversal pattern, any formation of bullish reversal is too early to expect. But, the bearish candlestick pattern of three black crow is still intact and its negative implication is currently unfolding in the market- daily timeframe chart.
A long negative candle was formed on the weekly chart, which was formed after a gap of 4 months. This candle has breached the immediate weekly support of 10 week EMA at 13720 levels. This moving average was offering support for the Nifty in past. Hence, this market action could be a confirmation of top reversal pattern as per larger timeframe chart.
The main reason for the high market volatility in the market is Union Budget 2021 of 1st Feb 21 (Monday). The historical study of past Union Budgets of the last 7-8 years indicate strengthening of either trend (up or down trend) post the event. Having moved up sharply in the last few months, further weakness from here can't be ruled out after the budget.
Conclusion: The short term trend of Nifty continues to be weak. The negation of upside bounce attempt and the downside break of weekly support could signal more declines ahead for the Nifty. The key economic event of Union Budget could play vital role to show the direction for the market. Any rise from here could encounter resistance around 13750-13800 levels. The near term downside targets to be watched for Nifty around 13050 (20 week EMA) for the next few weeks.
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