Nifty - Breakout above 18267 has limited, but breakdown 18042 can offer a big trading opportunity

As we stated in our previous technical journal that the Nifty-50 Index needs to maintain weekly closing above 18265, to continue its ATH journey. Which was going smoothly till last Thursday, when the benchmark index touched its highest point of 18267.45, but the news of MSCI regarding HDFC twins on Friday, makes the market sentiment negative for the week.

Those who are looking for more knowledge about MSCI India sectorial index, please read the article below link:

https://www.msci.com/documents/10199/1ad792ce-3199-445c-8be3-f2a035ac782d

Overall Nifty 50 Index closed near the low point of the week, the NIFTY index closed absolutely fat with a negligible gain of just 4 points (+0.02%) on a weekly basis only.

Let us discuss the technical chart of all major time frames:

Nifty 50 Index Monthly Chart

It is too early to say nothing about the monthly chart of Nifty because it is still in between in the formation of the monthly candle. At least it is a piece of good news that, it has started with the rejection from the stated level, but still holding the 18057 level, which could once again form it to continue its journey towards the higher end, but the only condition is, it should not breakdown 18042 in coming week.

Nifty 50 Index Weekly Chart

Previously we suggested a resistance level from where Nifty can take retracement, and exactly the same happened on the last day of the previous day's trading session. It is said that the piece of information from MSCI against HDFC twins made the week bearish, but as per technical data suggest, it seems that FIIs were well aware of this news and they were writing the calls or making short positions on 18100 and 18200 on the day of expiry, i.e. Thursday, on 4th May 2023, but somehow DIIs manage to take Nifty higher with cash buying, which concludes their session in big losses. But they got the chance, with the news to make sentiment more bearish on Friday 5th May 2023, and grabbed the more bigger profit in their kitty.

Status of Head & Shoulder Pattern on Nifty Weekly Chart

Technically head and shoulder pattern is still valid with a slight upward of its right shoulder. It took rejection from the stated point and now the Nifty-50 index weekly chart resembled the daily chart with a shooting star pattern, which has bearish implications.

Status of Nifty Fibonacci Chart on Weekly time frame:

In our previous technical journal, we stated caution because the level of 61.8% had a combination of resistance levels, which now ends up with a shooting star candle, which is a bearish sign for further trading sessions.

Nifty 50 Index Daily Chart

Even all the moving averages, help us to tell us technically we are bullish, but to be in this stage, the Nifty 50 index needs to hold the range of 18042 to 18057 on Monday, 18081 would be the level, where we can think Nifty is taking its support, but only above the range of 18160 and 18181, we can say, that we are ready to move ahead again for the level of 18265-18300 zone at least.

Below 18042, Nifty can retest the levels of 17950 and then 17800, and in the worst-case scenario, it could touch the level of 17717.

FII s Activities in the previous week:

At least we can say with these data, that FIIs have started buying quality stocks again after a long gap. But this seems only for a short-term basis. Because DIIs are also started churning their portfolios from less leveraged stocks to high market capitalization stocks.

FIIs have reduced their index short positio