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Daily Technical View on Nifty

Observation: After showing weakness with range bound action on Tuesday, Nifty witnessed sharp weakness and strong upside recoveries on Thursday and settled the day with a loss of 92 points. After opening with a downside gap of 82 points, the market slipped in to further decline in the early part of the session. Further weakness triggered in the mid part but, the market has managed to show sharp intraday upside recovery in the later part of the session and closed the day off the lows. The opening downside gap remains unfilled.

A small candle was formed on the daily chart with almost identical open and close and with long lower shadow. Technically, this pattern indicates a formation of doji or hammer type candle pattern. Normally, formation of such patterns after a reasonable declines or at the key supports alert for a comeback bulls from the lower levels, after the confirmation. Hence, a sustainable close above 19500 levels is expected to confirm short term upside bounce for the market.

Conclusion: The short term trend of Nifty remains negative. Formation of doji/hammer type candle pattern near the support indicates chances of an upside bounce in the short term. 

A decisive close above 19500 levels could possibly open upside bounce towards 19650 levels in the near term. Inability to sustain the upside bounce or a decline below 19330 is likely to trigger fresh weakness for the market ahead.

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