As we suggested in our previous technical journal that the above 18267, the upside is minimal in the prior week. The same happened and the Nifty 50 index weekly closing happened at 18314 on a weekly basis, so it is only 49 points upside from our estimated level.
Because there was no breakdown, below the level of 18042, so the bearish trade didn't activate for the entire previous week.
Overall the NIFTY 50 index moved in a 289.40 points range and ended towards its high point just below the key resistance levels. The benchmark index closed while posting net gains of 245.80 points (+1.36%) on a weekly basis.
Nifty 50 Index Monthly Chart
In the Nifty 50 Index Monthly Chart, candles respected the resistance level and still trying to break it to reach up to a present all-time high, or maybe (who knows), can give a good break-out from this level to create a new all-time high level in the future.
Status of Head of Shoulder on Nifty 50 Index weekly chart
We are following this technical formation of the Head and Shoulder pattern for quite some time, but the previous week's bullish green candle seems to make it null and void for the time being, because it has broken the height of the left shoulder which was the level of 18091. So this makes this pattern invalid now.
Nifty 50 Index - Weekly Chart
We can analyze that the Nifty Weekly Index has closed, this week, at the previous resistance levels, but as we can see previously 9 times, the Nifty weekly index has already tried to break it out on several occasions.
The monthly and weekly momentum of bullish candles forces us to think that this time the index is going to break this level decisively.
The level of 18500, is attempting to form and test a recent triple-top. Any move towards the 18500-18600 levels will see the NIFTY testing this level for the third time since October 2021.
A decisive and meaningful with full volumes of breakout may lend more strength to the Index, as of now, the level of 18500 is a very strong resistance for the Index.
This time most strong reason for the upside seems FIIs are buying in the cash market, by FIIs, the activity started in March 2023 and is still going on continuously.
Please find the daily FIIs cash buying data below:
Status of Nifty Fibonacci Chart on Weekly time frame:
As we can see now, the pattern has already crossed the resistance level, which we cautioned in our previous technical journal, and already started the journey toward its next level of 7.86%, which is sitting at 18456, in round figure, it could be 18500, which is again a round number and also another resistant level.
Nifty 50 Index Daily Chart
All the moving averages are supporting the daily index chart, which seems it can resume its journey toward an all-time high level.
If this week anytime, the index will not break the level of 18194 on a closing basis. and If the Nifty index started closing above 18389 during this weekdays, it could continue its upward journey at least towards 18500 this week itself.
Outlook for the NIFTY 50 Index for Coming Week starts from 15th May 2023
The Nifty 50 index has formed a green candle with a long lower shadow on a daily chart, which is indicating buyers are available at lower levels, this could be because bulls are more confident and feeling comfortable in the falling India VIX.
If the Nifty 50 index should continue to hold itself above the 18250 level in the coming week, we can resume the upward momentum toward the 18400 and 18442 levels. The Nifty 50 has very good supports in place at 18181 and 18081 levels.
As per Technical charts trading range between 17900 and 18500 is still a safe zone for option writers. The Nifty has an immediate range between 18150 and 18450 levels.
As long as the Nifty 50 index remains above 18200, the overall trend is expected to remain positive, before we reach the level of 18400, which seems an immediate resistance.
We need to keep some important notes with us:
1. As per monthly data mutual funds sold stocks worth Rs 5,100 crore while FIIs bought Rs 12,400 crore worth of stocks.
2. On the retail side, equity flows in mutual fund schemes moderated to Rs 6,500 crore — a five-month low — mainly due to the seasonality of a dull month.
3. SIP flows too moderated to Rs 13,700 crore in April from a record high of Rs 14,270 crore seen in March.
4. However, small- and mid-cap received inflows of Rs 2,200 crore and Rs 1,800 crore, respectively.
5. Sector-wise, mutual funds prefer banking stocks with nearly 22% ownership, followed by consumer and IT stocks at 15% and 12%, respectively.
Over the past several weeks, the persistently low levels of VIX have remained a concern; this volatility gauge violated its pre-pandemic 2020 lows when it closed
below 11 levels. The previous week India VIX journeyed from 12.73 to 13.51 before closing at 12.85. This gives the bulls an edge to move further.
Support Level for the Coming Week for NIFTY:
The broader support level on the technical chart could be 18180 followed by 18042. and below this level, the strongest support exists at 18000.
Resistance Level for the Coming Week for NIFTY:
The broader resistance level on the technical chart could be 18390 followed by 18490.
As per the technical chart, the market should not move in a single direction, without corrective moves, but we could not find any signal, where the market could become corrective and try to spend some time in consolidation, If this could not happen, it could become an unhealthy market and a sudden profit booking can make the traders surprised from any higher levels.
So, it is advisable, to stay invested in defensive, low-beta, and relatively stronger fundamental stocks.
If you are a trader, trade with very very strict stop loss.
Thanks for reading. Keep Trading Stay Invested Regards, Neeraj Bhatia (Managing Director) https://www.crbpvl.com/
Disclaimer: I am not a SEBI Registered technical Analyst, so consult your financial advisor, before taking any trade. This technical post is only for learning purposes.