Technical Quote: Nagaraj Shetti, Technical Research Analyst, HDFC Securities

The formation of the candle pattern at the supports on Thursday and the overall chart pattern signal a possibility of an upside bounce in the short term.

Weakness with volatility continued in the market on Thursday the day of the weekly F&O expiry and the Nifty closed the day lower by 88 points. After opening on a negative note, the market showed high volatility for the day. Upside recoveries in between were met with selling pressure at intraday highs. The opening downside gap has been filled.

A small positive candle was formed on the daily chart at the lows, with upper and lower shadow. Technically, this pattern indicates a formation of a high wave type candle pattern. Normally, such high wave pattern formation after reasonable up moves or declines more often acts as a reversal pattern, post confirmation. Hence, there is a possibility of an upside bounce in the short term.

The candle pattern of the last three sessions signals a gradual weakness with volatility. This could be a sign of relief for the bulls after a display of sharp downside momentum on 15th and 16th September.

Conclusion: The short-term trend of the Nifty continues to be choppy. The formation of the candle pattern at the supports on Thursday and the overall chart pattern signal a possibility of an upside bounce in the short term. Immediate support is placed at 17530 and the next overhead resistance is to be watched at 17750 levels.