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Daily Technical View on Nifty

Slowdown of downside momentum..

Observation:

After showing intraday weakness from the highs on Wednesday, Nifty shifted into a narrow range movement on Thursday and closed the day lower by 36 points.

After opening with a negative note, the market slipped into minor weakness soon after the opening. It later shifted into a narrow range movement for better part of the session. The high low range for the day was around 139 points.

A small negative candle was formed on the daily chart at the new swing lows of 24341 with minor upper and lower shadow. Technically, this pattern is indicating a formation of doji type candle pattern (not a classical one). Normally, a formation of doji after a reasonable upmove or down moves are considered as an impending reversal pattern on either side post confirmation.

After the formation of inverted hammer type candle on Wednesday, Nifty forming a doji type candle pattern on Thursday could indicate that the bulls are preparing to comeback from the lower levels. Absence of sharp selling momentum at the lows in the last couple of sessions is also signaling the chances of an upside bunce.

Conclusion: 

The short-term trend of Nifty remains negative. But the present pattern formation is signaling a possibility of an upside bounce from here or from slightly lower levels. A sustainable move above 24600-24700 levels could confirm quantum of upside bounce in the market. However, a slide below 24300 could trigger more weakness for the near term.

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