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Daily Technical View on Nifty

Observation

After showing minor weakness with range bound action in the last 3-4 sessions, Nifty made an attempt of upside breakout of the range on Monday and closed the day with decent gains of around 119 points. After opening with a positive note, the market slipped into weakness in the early part of the session. Sustainable buying has emerged in the mid to later part of the session and Nifty closed near the highs.

A small positive candle was formed on the daily chart with long lower shadow. Technically, this pattern indicates an upside breakout of smaller range movement at 17650 levels. However, the recent formation of bearish engulfing pattern as per daily and weekly timeframe chart remains intact. A decisive move above 17865 levels is expected to negate this bearish pattern and that could probably open sharp upside for the market ahead.

Bank Nifty has outperformed the benchmark Nifty on Monday. One may observe an attempt of upside breakout of the small range movement in the banking sector. Positive chart pattern of higher tops and bottomsis also visible on the daily chart.

Conclusion

Nifty is showing signs of upside breakout of the small narrow range. But, a decisive upside breakout could only occur on Nifty surpassing the crucial area of 17865 levels in coming sessions.

That action could possibly result in sharp positive reversal for the Nifty. Immediate support is at 17600 levels

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