What to Expect on 27 October 2020 ?
Based on End of 26 October 20
by Mr. Nagaraj Shetti, India`s highly Renowned Technical Research Analyst at HDFC Securities
After showing a range bound action in the last 4-5 sessions, Nifty slipped into a sharp weakness on Monday and closed the day lower by 162 points. After opening on a slightly positive note, Nifty moved into a usual range in the early part of the session. The sharp downside momentum got triggered in the mid part and Nifty showed weakness in the later half and finally closed the day with minor upside recovery.
A long bear candle was formed with minor lower shadow. Technically, this pattern reiterate a presence of key overhead resistance around 12000 mark, but the market has managed to close above the immediate support of 20 period EMA at 11736.
The formation of long range negative candles have failed to show sharp follow-through weakness in the market in recent times. After the formation of long bear candle on 15th Oct, the market has witnessed a meaningful upside bounce for the next four sessions, before declining from the highs. The high of bearish engulfing pattern remains intact at 12025 levels.
Hence, the formation of long range bear candle of Monday is expected to bring bulls back into action from current levels or from the lows as happened in the past. The important lower support is placed around 11650-11600 levels (intermediate trend line-weekly chart).
Nifty on the weekly chart is still placed within a broader high low range of 12025-11660 and we observe a formation of small bull and bear candles above the support area of 11650 (significant trend line support as per the concept of change in polarity, after breaking above it recently – weekly chart).
Conclusion: The short term trend of Nifty seems to have reversed from the highs, but the near term trend status of the market remains range bound around 12000-11650 levels. The sharp follow-through weakness is not expected from here in the short term, but there is a possibility of an upside bounce emerging from here or from slightly lower levels. The crucial lower support is placed around 11650-11600 levels.
Daily Market Wrap Up by Mr. Sameet Chavan
( Chief Analyst-Technical and Derivatives, Angel Broking):
Last week, we witnessed some choppy moves but the overall bias remained positive. In fact, we had mentioned how multiple technical indicators are in favour of bulls. All those observations still remain valid as long as we hold strong as well as crucial support zone of 11700 – 11660. Below this the short term trend reverses and hence, one should avoid aggressive longs in the market thereafter. Till then interpret this as a reaction to global development and stay hopeful for recovery. For the coming session, 11820 followed by 11850 would be seen as immediate resistances.
Today, the breadth was extremely negative and the midcap index which was placed at an interesting level, saw some decent correction. Tha banking too corrected but the major culprit in today’s weakness was Reliance. We reiterate that the volatility is likely to be on the higher side as we move closer to the US Presidential election. Hence, traders are advised to stay light and keep strict losses for positions.”
Market Wrap up by
Shrikant Chouhan, Executive Vice President,
Equity Technical Research at Kotak Securities
After the massive struggle for the last five days to sustain and close above 11850 levels, finally, the Nifty gave up. Today the Nifty closed below the level of 11800 following hefty selling in index giants namely Reliance Industries, ICICI Bank, HDFC Bank and Infosys Technology. The Nifty index has formed large Red/Black Body candle that would not allow the market to sustain at higher levels. The sell-off was so intense that the Nifty dropped to 20 days SMA without any meaningful support, which was at 11715. However, due to extreme oversold activity, Nifty reversed back sharply from the levels of 20 days SMA and closed at 11767. Technically, the market is ready to hit the levels of 11600 on the minimum side and in the worst-case scenario 11428 levels. The strategy should be to short the Nifty if it bounces to 11830/11850 with a final stop loss at 11900 or below the level of 11710. We expect further weakness in the Bank Nifty if it breaks 23770 levels.”
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