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Daily Technical View on Nifty

Bottom reversal is on cards..

Observation: After witnessing a sharp weakness on Monday, the Nifty showed a sustainable upside bounce on Tuesday amidst a high volatility and closed the day with decent gains of around 128 points. 

A long bull candle was formed on the daily chart with long lower shadow. This positive candle has partially engulfed the long bear candle of Monday on the upside. Technically, this indicate a type of 'counter attack bulls' type pattern at the lows. Such formations after a reasonable declines or at the supports are considered as a bottom reversals post confirmation. Hence, a further follow-through upmove from here could open a sizable upside bounce in the market ahead.

Nifty sustained the crucial lower support of 16900 levels on Tuesday (uptrend line connected previous swing highs, as per the concept of change polarity). Previously, this trend line support was falsely broken on the downside during mid of Dec and the sharp upside bounce has resulted later. Having moved below this support marginally this time, the odds of decent upside bounce can't be ruled out in the near term.

Conclusion: The sharp down trend in the market seems to have halted at the important support and the market is now ready to show upside bounce. A confirmation of bottom reversal as per Tuesday's low is likely to pull Nifty towards the upper 17800 levels in the near term. Any dips could find support around 17100 levels.

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