We suggested 19700 a very important level in our previous technical journal, and it moved both sides; On the higher side, it touched 19849.75 and downside it touched 19512.35 levels. So market respects our thought process
Post Market Weekly Analysis
The Nifty 50 weekly Index opened at 19737.25 touched the high level of 19849.75 and slipped down to 19512.35 before closing at 19542.65. So the benchmark index oscillated in a range of 337.40 points over the previous five trading sessions, finally closing with a marginal loss of -208.40 points, i.e. in percentage term (1.06%) on a weekly basis.
Nifty 50 Index Monthly Chart
We have only three trading sessions left in the October month expiry. And from the chart, it seems, we are going to close in red. In the current trading session, we closed in the Dozi candle, which is an indecisiveness in traders. The only good point is this, we have got all SMA's support for the medium term. Need to watch for the level of 19333, below this level, we will become bearish immediate term.
Nifty 50 Index Weekly Chart
The weekly chart suggests that we are trying to save the level of 19500, because, below this level, we will become bearish immediately and can see the levels of 19400 and 19300.
The market closed below the 9-Week SMA and above the 20-Week SMA.
The best part is that we have not touched 19480, which was the previous week's low. Instead of our weekly lowest point was 19512. So this gives us hope, that we can maintain 19500 as a strong immediate support. But if we do not, then we can see a good fall.
Nifty 50 Weekly Fibonacci Chart Status
If the Fibonacci retracement level of rise from 19333 – 19850 is placed, we can see that the 0.618 level is becoming an immediate support level, and below it, the next level will be 0.786 which is placed near 19450. the immediate resistance is 0.5 levels and the maximum high could be 0.382 levels, which is placed at approximately 19650 levels.
Nifty 50 Daily Fibonacci Chart Status
On the daily charts, we can observe that the Nifty 50 Index is trading at the crucial support zone of 19530–19500 where 61.82% Fibonacci retracement level of rise from 19333 – 19850 is placed.
Considering prices are trading at crucial support levels only a breach below 19500 – 19450 zone shall lead to a sharp decline. In terms of levels, 19550 – 19500 is the crucial support zone, while 19640 – 19660 shall act as an immediate hurdle zone.
Nifty 50 Index Daily Chart
Nifty on Friday ended 82 points lower to form a Dozi candle on the daily chart and a long bear candle with an upper shadow on the weekly timeframe.
The short-term trend of the Nifty remains negative. A slide below the immediate support of 19480 could drag Nifty towards another important support of 19350 levels in the near term. Immediate resistance is placed around 19650 levels
The daily momentum indicators RSI and MACD have triggered a negative crossover which is a sell signal.
Nifty 50 Index Hourly Chart
The hourly momentum indicator is showing a positive divergence, however, price confirmation is missing. In that case, we should be ready for a short pullback rally, which could be sold off after getting a resistance range from 19650 to 19800 levels.
Nifty 50 Index Weekly Chart -with Technical Indicators
RSI Indicator Pattern
The weekly RSI is 57.58; it has marked a new 14-period low which is bearish. It is not a good sign for the equity market in the near term. It could slip southward.
This weekly indicator is at 47.87, which indicates bearishness. The smart money had heavily sold Indian Equities, but now they have somehow stopped, but the main question is if they are interested in buying. the answer lies in FII's weekly data.
MACD Indicator Pattern
The weekly MACD is bearish and trades below its signal line. the histogram has already indicated this 3 weeks before, and now it is following up the same.
FII's Cash Weekly Activities
As we suggested in the previous week, comparatively, FII will be reduced its selling spree during the previous week, the same they did it. But as we are concerned in the previous week, they have increased their position in Future selling contracts, this showed, that FIIs are bearish on our equities market, from the short to mid-term perspective.
FII's Cash Monthly Activities
So far in October month, FIIs are still sellers and they have sold approximately 13411 Crores equities in cash. DIIs tried to cover the losses due to FIIs selling, by purchasing a similar number of equities to support the market, but it was not enough.
FPIs have been selling across the board in sectors like financials, power, FMCG, and IT. Selling was subdued in automobiles and capital goods. They were buyers in telecom.
If the safest asset class in the world, the US bond, yields around 5 percent it is rational for FIIs to take out some money. It is important to note that the FII selling is not large. This means, that when the tide turns, capital outflows will be reversed. Thus, it will be crucial to monitor FII activity in the coming week.
Outlook for the NIFTY 50 Index for Coming Week
As long as the Nifty 50 index is trading below the 20-day SMA, the weak sentiment is likely to continue. For traders, 19650-19700 would be the immediate hurdle, and below the same, the index could slip to 19450-19350. On the other side, above 19700 or 20-day SMA, it could retest the level of 19800-19850.
The current trend appears to be negative, with immediate support situated at 19500. A further decline below this level could potentially lead the index towards the range of 19150 to 19,000. On the upside, the zone between 19600 and 19650 is expected to act as a strong resistance. A move above 19650 could trigger short covering in the market.
For Bank Nifty Index, as long as it is trading below 44500 or a 50-day SMA, the weak sentiment is likely to continue, below which, it could slip to 200-day SMA or 43200-43000. On the flip side, above 43900 a minor pullback rally is possible till 44300.
The previous week India VIX closed at 10.81 from 10.61 Within five trading sessions, it touched a high of 11.21 and a low level of 09.15, It gained on a closing basis by
0.20000 (1.88%) on a weekly basis.
Support Level for the Coming Week for NIFTY:
The broader support level on the technical chart could be in the range of 19400 followed by the level of 19330. levels.
Resistance Level for the Coming Week for NIFTY:
The broader resistance level on the technical chart could be 19650, followed by 19800 levels.
It is to be believed crude oil prices in the short term will remain volatile amid the war in the Middle East. From a technical perspective, crude oil supply is likely to be seen near the 7580 zone, while the 7225 acts as a good demand area. NYEMX WTI crude oil has resistance at $91.50 and support at $87.80.
The Nifty 50 Index formed a Dozi candlestick pattern on the Daily charts on Friday as the closing was similar to opening levels, indicating the bulls and bears are indecisive about the further market direction, while on the weekly charts, the index has formed a bearish candlestick pattern with upper shadow but maintained higher highs, higher lows formation as well as previous week's low of 19480, which is expected to be crucial for the coming week too.
If the index breaks the same support decisively, then 19300, the low of the current month can't be ruled out but in case the holding of the support can take the Nifty 50 Index towards 19700-19850 area again.
A breakout in either direction within this range has the potential to trigger a significant move, possibly spanning 200 to 400 points in one direction.
Reading Current Option Data
The Options data also indicated that 19500 is expected to be a key level for the market downside, while the hurdle on the higher side will be 19600-19800 area.
The maximum Call open interest was visible in 20000 strikes, followed by 19800 & 19600 strikes, with meaningful Call writing at 19600 strikes, then 19700 & 19500 strikes,
The maximum Put open interest was at 19000 strikes, followed by 19500 & 19400 strikes, with Put writing at 19400 strikes, then 18700 strikes.
Strong Call writing was observed at the level of 19600 Strike while a decent amount of put writing was observed at the level of 19500 Strike, keeping the Nifty rangebound,
Important Upcoming Weekly Activities
Globally, the US market faced a 1% drop after comments from the Federal Reserve President hinted at prolonged higher interest rates and a set inflation target of 2%, raising concerns among investors.
Summary - Overall
The pattern analysis of the weekly chart indicates that the markets will have their upside capped and they have also dragged their resistance points lower from 20000 to 19800 levels. All technical rebounds will find resistance at this point.
Further to this, the index has also closed very near to the 20-week MA currently placed at 19437. So, in the event of any extended corrective move, the index is expected to seek support at this point, i.e., the 20-week MA. If this gets violated, it
will invite incremental weakness.
Overall unless rollover and expiry-centric moves cause technical rebounds, the markets are likely to largely exhibit a continued corrective undertone.
Do not use excessively leveraged positions, if up move comes in the market, it is better to book your profit on higher levels.
A cautious outlook is advised for the day.
Thanks for reading.
Neeraj Bhatia(Managing Director)
Disclaimer: I am a National Stock Exchange-certified Technical Analyst and Chartist but not a SEBI-registered analyst, so consult your financial advisor before taking any trade. This technical weekly post-market journal is only for learning purposes and it is downloadable free of cost. The views written here are entirely only my personal views. I am not forcing anyone to follow my thoughts. I do not have any WhatsApp Group ID or Telegram ID related to it.