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Daily Technical View on Nifty

Formation crucial bottom reversal..

Observation: After showing downside momentum over the last 5-6 weeks, Nifty witnessed an excellent upmove on Friday and registered largest one day gains of last couple of months to settle at 557 points. A long bull candle was formed on the daily chart, which is indicating an important near-term bottom reversal pattern at the low of Thursday at 23263. After the display of lack of sharp selling interest below crucial 200-day EMA around 23500 levels recently, Nifty eventually regained the key moving average at the highs and closed above it. This moving average takeover action is going to be crucial with regards to rend reversal on the upside for Nifty. The same moving average has offered important bottom reversals in the past (26th Oct and 4th June).

Nifty on the weekly chart formed a reasonable bull candle with long lower shadow. Nifty has bounced back from near the support of crucial ascending trend line around 23250 levels. This is positive indication.

Conclusion: The sharp upmove of Friday seems to have reversed the near term trend of Nifty towards up. A sustainable upside bounce from near the crucial supports like (200day EMA and up trend line) is signaling a formation crucial bottom reversal pattern around 23263 levels. A present move above the initial hurdle of 23800 could indicate strength of an upside bounce.

The next upside levels to be watched around 24500 by next week (around 23.6% Fibonacci projection, taken from the bottom of 4th June/top of 27th Sept and Thursday’s low. Immediate support is placed around 23600.

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