HSL Weekly Insight
Week ahead for Nifty with technicals…

Nagaraj Shetti


Hence. • After opening with slight positive note in today’s session. as today’s opening was not much higher as of the close of Thursday). Previously. • A negative candlestick pattern has been formed today. this is negative development and it suggests counter attack of bulls from the higher levels. • The previous pattern of false downside breakout (bear trap) of later Dec-16 has been achieved with its upside pattern target of around 8275 levels. we have witnessed a false downside breakout (bear trap-also called as bullish spring-marked in lower X) during later part of Dec-16 and that has eventually impacted with smart upside bounce back. • The daily 14 period RSI has turned down from the high of 60 levels. the formation of today’s bull trap/bearish up thrust could open up the potential downside target of around 7915-7900 levels (down to the lower band and this could be achieved in the next few weeks). a candlestick pattern of dark cloud cover is an impending reversal signal after its formation on the reasonable upmove. RETAIL RESEARCH P age |2 . Nifty slipped into gradual decline for better part of session. the daily RSI is now expected to slide down to the lower 40 levels or below that once again. RETAIL RESEARCH Nifty Daily Timeframe Observation: • Daily Timeframe: After showing a fine upside breakout of sideways consolidation on Thursday. The underlying trend for the day was choppy with negative bias. which is an upper boundary of bearish high low range of around 60-30 levels. This expected pattern of RSI could mean beginning of weakness in the market ahead. which seems to be a type of ‘dark cloud cover’ (not a classical pattern. Nifty was not able to continue with upside momentum today and slipped into decline. As per the said range theory. • Normally. However. Hence. we need confirmation of follow through weakness in coming sessions. • The pattern of horizontal band (blue parallel horizontal line) is active currently and we observe a false upside breakout of the upper band around 8275 levels (bull trap-also called as bearish up thrust-marked in upper X).

• Normally. • A small body candle pattern has been formed this week with long upper and lower shadow. • After showing sharp weakness during early Dec. This was mainly due to the strength of ongoing intermediate down trend. which is signaling a formation of rare high wave type candle pattern. on the confirmations (few of such upward and downward reversals have been marked in X-weekly chart). To call this high wave type pattern as a near term top reversal. could encounter with the strong valuation resistance of around 8350 levels (green dashed horizontal line) as per the concept of change in polarity. Nifty was able to show follow through upmove this week. the market is showing frequent instances of lack of strengths after showing sharp one week upside bounce backs. but closed with the modest gains of around 58 points. post smart upside bounce back. RETAIL RESEARCH P age |3 . • Presently. we need confirmation of weakness by next week. • Further upmove from here. a formation of such patterns after a reasonable up/down moves are considered as an impending reversal signals. RETAIL RESEARCH Nifty Weekly Timeframe • Weekly Timeframe: After showing an excellent upside bounce back during last week. Any decline from here could possibly lead to the revisit of the strong support of around 7900 levels. this week’s high wave type candlestick pattern is one step ahead in pointing towards the possibility of weakness in the market for coming 1-2 weeks. • Hence. as per w-o-w basis. the Nifty is now in the process of exhibiting similar kind of action (preparing to show sharp weakness immediately after the upside bounce back of last and this week).

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Any holding in stock – No Disclaimer: This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. one may expect Nifty to revisit the 7900 levels or just below in the next 2-3 weeks. Crompton Greaves.