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Nifty 50 -Will it bounce back or rest in the consolidation phase?

Welcome to the most Volatile week ahead, before the next two lackluster weeks before year-end.

The nifty 50 Index followed the same, as what we studied in our previous week's technical journal.

Nifty 50 Index Monthly Chart:

The Nifty 50 monthly chart slips down from its all-time high and shows a red candle and gives a signal, that it has good room to go down from this level.

Do you think it can go down so smoothly? Where does a large number of investors have a feeling of being left out? It can and it can not be.

The Nifty 50 monthly index is still intact with a huge range of between 18000 and 19000. There is no change in it.

Let us dive into weekly analysis with the chart.

Nifty 50 Index Weekly Chart

The Nifty 50 Index weekly chart has done the same as we have expected last week. If could not cross the level of the previous week's high levels as well as our suggested levels of 18887 and also could not able to consolidate or stop itself above 18604 (which was our previous all-time high), then it took a rest only near 18410 (The lowest point of the week), before bouncing back to 18496, the Friday closing figure. We were expecting it to touch near 18400, which was missed with only 10 points.

The level of 18887 is still valid for this week also. We are expecting if Nitry 50 Index to cross this level to catch 18950 on the higher side because generally, historically speaking 60% times the Nifty 50 Index has relatively outperformed the NIFTY Bank index in December month. the justification is very simple, in December month our trading volume will be very thin and it is very easy to move the market to one side, whichever is high on its probability.

Nifty 50 Index Daily Chart

The Nifty 50 daily Index on Friday clutched itself on the high and low of SMA lines, which indicates 10 and 20 SMA. It started going down and also crossed the 20 SMA line, but again regain 20 SMA, which shows that the large wick of the red candle clearly indicates that the low side of the Nifty 50 index is somehow restricted going forward.

In my analysis, the maximum downside is capped up to 18300, If it tries to touch, I will suggest "BUY on Dips" and wait for the upward move to catch quick gains. Keep your eyes open on 18367, which is the level from where the Nifty 50 Index will try to bounce back immediately because this is a strong support zone and a lot of buyers are waiting for a quick dip to accumulate on this level.

Nifty Bank Index Chart

I personally feel that Nifty Bank Index Chart is still showing a strong upward trend. There is no weakness sign and this can touch another high soon.

I will suggest not shorting the Nifty Bank till it is in the range of between 43360 to 43325. There is a clear signal that it can bounce back and above 43700, it can go up to 43852, and it it is crossing 43852 with volumes than can touch the high of 43941 immediately. Just remember, that below 43325, the Nifty Bank will slip into the bearish zone.

Outlook for the Next Week Starting from 12th Dec-2022

In the coming week; all eyes would stay focused on 18600; the sooner the NIFTY 50 Index crosses above this point, the better it will be for the index. Otherwise, it will continue to stay under corrective consolidation for some more time.

The coming week has resistance levels a range between 18600 and 18950. And the supports will come in the range of 18480 and 18300, where 18367 is the most important point to bounce back.

The best way to navigate these markets would be to keep leveraged positions under control and overall exposures at modest levels.

It would be prudent to keep protecting profits on either side.

A cautious approach is advised for the coming week.

Thanks for reading.

Keep Trading

Stay Invested


Neeraj Bhatia

(Managing Director)

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