By Nagaraj Shetti Technical research analyst, HDFC SecuritiesWhere we are: The downside momentum continued in the Nifty for the sixth consecutive session on Friday.
A negative candle has been formed with long lower shadow.
This daily candle pattern is resembling a bullish hammer pattern, but not a classical one.
However this pattern is indicating an emergence of value buying at lows.
We observe a range bound action with symmetrical price movement in Nifty in the last couple of months.
Small bottom reversals have been formed after a weakness of about six sessions.
Having declined for six consecutive sessions from the swing highs (11,118) and also a formation of long lower shadow of Fridays candle, there is a high possibility of a small upside reversal in this week, probably resulting in lower highs.What is in store: A long bear candle has been formed in last week with minor lower shadow, as per weekly chart.
Technically, this pattern is indicating a formation of bearish belt hold line.
Normally, a Bearish belt hold line is a top reversal pattern and signals weakness in the underlying.
But being placed within a larger sideways range, the significance of pattern implication could be less.What could investors do: The short-term trend of Nifty is weak.
Being placed near a support and after a positive chart pattern, one may expect small upside bounce in the Nifty from near 10,585-600 levels in this week.
The overall chart pattern of larger timeframe is indicating a possibility of minor upside bounce in the market, which could be a sell on rise opportunity.
Sectorally, IT, capital goods, energy and media could outperform, while PSU banks, metal and pharma sectors could underperform over the near term.