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Daily Technical View on Nifty

Sharp reversal on the downside…

Observation: After showing a range bound action with positive bias in the last few sessions, Nifty slipped into a sharp weakness on Tuesday and closed the day lower 195 points. A long bear candle was formed on the daily chart after opening higher. This bear candle has engulfed the sideways range of the last four sessions. Technically, this pattern indicate a formation of bearish engulfing pattern at the highs. Normally, such candle patterns after a reasonable upmoves or at the crucial overhead resistances signal a possible trend reversal in the market. Hence, bulls needs to be cautious at the highs.

The immediate support of uptrend line (connecting rising swing lows) has been broken on the downside at 18250 levels and Nifty closed below it. Tuesdays long negative candle reflects sharp profit booking at the highs. Such negative pattern was absent in the last 24-25 sessions, after the bottom formation at 16410 of 20th Dec 21. The important hurdle of previous swing high at 18342 of 27th Oct remains intact.

Conclusion:

Conclusion: The consistent upmove of the last 3-4 weeks seems to have ended on Tuesday with the sharp reversal from the highs. The placement of key overhead resistance, formation of negative candle pattern and the downside breakout of immediate support are all pointing towards more weakness in the short term. Any upside from here could find resistance at 18225, which could be a sell on rise opportunity. Next lower levels to be watched at 17800.

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