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Daily Technical View on Nifty

Possibility of an upside bounce..

Observation:

After showing higher levels weakness on last Wednesday, Nifty witnessed sharp weakness on Monday and closed the day lower by 302 points amidst a range bound action. After opening with a downside gap of 290 points, the market shifted into a narrow intraday range for the better part of the session. Intraday upside recovery was observed in the mid part from the low of 17067 and Nifty closed the day lower by erasing some of intraday loss. The opening down side gap remains unfilled. A small negative candle was formed on the daily chart with gap down opening and with long lower shadow. Technically, this pattern indicate a formation of bullish hammer type candle pattern (not a classical one, as open and close are not identical). This candle pattern brings hopes for bulls to make a comeback from the lows. A sustainable upmove above 17240 levels could confirm reversal pattern.

The large opening downside gap was formed on the daily and weekly chart. Previous opening gaps as per weekly chart have been filled subsequently after opening. Nifty is now placed at the important valuation support of around 17000-16800 levels. This area was acted as a significant reversal in the past and resulted in a substantial moves in Nifty on either side. Hence, there is a more scope for short term upside bounce.

Conclusion:

The short term trend of Nifty is negative. The overall chart pattern indicate a possibility of upside bounce in the market from here or from near 17K mark. The confirmation of reversal pattern and the strength of upside bounce is likely to open a relief rally for the market.

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