15th August is a holiday on the occasion of Independence Day in India and declared a holiday for Stock Exchange, so we have the truncated week expiry for this week.
The previous week was busy with profit-taking bouts from higher levels, and sell on the rise was the only motto left for traders along with FIIs due to the low India VIX with high volatility.
The Nifty 50 Index opened at 19576.85, touching the high level of 19645.50, and slipped down to 19412.75 before closing at 19428.30. so the benchmark index oscillated in a narrow range of 232.75 points over the previous five trading sessions, finally closing with a net loss of 88.70 points, i.e. in percentage term (-0.45%) on a weekly basis.
The market was unable to find any biased direction throughout the week, but by and large overall mood of the market was negative.
Nifty 50 - Index Monthly Chart
We can say that, the downside is still not completed yet, but for the previous week, we have observed that the levels of 19234 are defended by the market and we have a long rejection wick from the downside from 19296 levels, in the monthly candle.
So it seems that for the time being, the Nifty 50 Index can spend its time for consolidation in a wide range of 19200 to 19650. Levels of 19750 will be the next resistance if 19650 will be broken decisively., which seems difficult in the coming week.
Nifty 50 - Index Weekly Chart
After the Weekly Three Red Candles formations, the Nifty 50 Weekly Index is taking support from the 9 Week Simple Moving Average. It took support from the same level in the previous to previous week, but in the previous week, it could able to defend the lowest level, which is a sign of consolidation.
It can not be ruled out, that one more strong dip down is possible because, in the previous week, the RED candle has not made any rejection wick below its body. We can expect a dip till 19200 and in the worst case, 19050 levels are possible.
Nifty 50 Weekly Chart ( Newly Adjusted Fibonacci Chart Status)
The range of 19305 to 19316 is a very crucial level, which should be defended by all means in the coming week. Below these levels, we can expect a good fall of 100 to 200 points, in one go. Till 19300 levels are defended, we can expect a good consolidation range in between.
Nifty 50 - Index Daily Chart
The daily chart of the Nifty 50 Index is showing more bearishness. The strong daily marubuzo candle, with a very small rejection wick, gives a clear signal, that more downside is on the way. It has already broken 9 and 20 SMA and now moving towards 50 SMA which sits at 19250 levels.
Nifty 50 - Index Daily Chart with Expanding Channel
We have observed a downward expanding channel, which is following from 20th July 2023, from new all-time high levels. We never closed above those levels in onward trading sessions. This expanding channel is showing that 19600 is emerging as a strong resistance and 19050 is emerging as a strong support as of now for a short-term view.
FII Weekly Activities:
As we discussed in our previous technical journal, FIIs are not leaving any opportunity to sell their stocks in the cash segment.
The last trading session of Friday is proof, that the first big red candle was the result of their view in cash segment selling, in the first 5 minutes, till the end of the day which was calculated at selling of 3073 crore.
FIIs have net sold Rs 4,700 crore for the previous week, turning net sellers on a monthly basis (over Rs 7,500 crore) for the first time in August after buying in the previous five months.
Outlook for the NIFTY 50 Index for Coming Week starts from 14th August 2023
The Nifty 50 Index has formed a bearish candlestick pattern with a minor wick on the weekly scale, making once again a lower high for the third consecutive week, but broadly traded within the previous to previous week's range.
Definitely, there is a sign of weakness in the index for the short term and the index could extend its correction but we believe that the downside in the market would be limited.
As per technical analysis and looking from a short-term perspective, a directional move should occur above 19750 or below 19300 levels. Until either of these levels is taken out decisively, expect the markets to continue consolidating in a defined range.
The previous week India VIX closed at 11.52 from 10.54. Within five trading sessions, it touched the high of 11.91, It rose on a closing basis by 8.99% 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 19350 followed by the level of 19200.
Resistance Level for the Coming Week for NIFTY:
The broader resistance level on the technical chart could be 19580, followed by 19650.
Reading Current Option Data:
On the Option strikes, It is observed that
The maximum Call open interest is at 19,600 strikes, followed by 19,500 strikes, with meaningful Call writing at 19,500 strikes, then 19,800 strikes.
On the Put side, the maximum open interest is at 19,400 strikes, followed by 19,500 strikes, with writing at 19,400 strikes, then 19,300 strikes.
The above data indicated that 19,300-19,600 is expected to be a trading range with support and resistance for the Nifty in the coming days.
It seems the traders made 19500 short straddles to get the maximum gain in this expiry.
Overall, the markets will continue to stay defensive and highly stock-specific. It is advisable to stay invested in defensive quarters like Pharma, IT, Consumption, PSE, etc.
A cautious and selective outlook is advised for the coming week.
Thanks for reading.
Disclaimer: I am not a SEBI Registered technical Analyst, so consult your financial advisor, before taking any trade. This technical weekly Journal post is only for learning purposes and its a free of charge. The views written here are entirely only my personal views. I am not suggesting here anyone follow my views. I do not have any WhatsApp Group ID or Telegram ID related to it.