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Daily Technical View on Nifty

Upside reversal post downward correction..

Observation: After showing weakness with range bound action in the last couple of sessions, Nifty shifted into a sharp upside bounce on Wednesday and closed the day higher by 157 points. After opening on a negative note, the market slipped into further weakness soon after the opening. It latershifted into a sustainable upside recovery from the day's low of 16438 levels. The upside momentum continued for rest of the session and Nifty finally closed near the highs.

A long bull candle was formed on the daily chart, that has engulfed the previous negative candle completely. This is positive indication and signal a formation of bullish Piercing Line type candle pattern. This action indicate possible completion of recent downward correction in the market.

The positive sequence of higher tops and bottoms is intact on the daily chart and Wednesday's low of 16438 could now be considered as a new higher bottom of the sequence. Now one may expect Nifty to move up and challenge recent higher top of 16752 shortly.

Conclusion: The sharp upside bounce of Wednesday opens a possibility of reversal on the upside after the higherbottomformation at 16438.

Hence, one may expect Nifty to advance towards the crucial resistance zone of around 16800-16850 levels in the short term. Immediate support is placed at 16580 levels.

Nifty – Daily Timeframe chart

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