In our previous technical journal, we stated our observation regarding the formation of lower highs, which continue this week also. After the completion of five trading sessions in the previous week, the Nifty 50 index has formed a bearish candlestick pattern by making lower highs, and lower lows for yet another week.
The Nifty 50 Index opened at 19666.35, touching the new high level of 19795.60, and slipped down to 19296.45 before closing at 19517. so the benchmark index oscillated in a range of 499 points over the previous five trading sessions, finally closing with a net loss of 129.05 points, i.e. in percentage term (-0.66%) on a weekly basis.
Nifty 50 Index Monthly Chart
Starting the month of August is a little subdued. We have already lost 474 points from the previous week's high levels. On the lower side, the Nifty tested 19296 levels in the last five trading sessions. It is too early to make any comments as we have another 20 trading sessions remaining. But whenever the monthly series has five weekly expiries, it is observed that generally market oscillates in a wide range, so we need to be cautious about volatility.
Nifty 50 Index Weekly Chart
The Weekly Index Chart has confirmed the weakness, by closing below the last two week's candles. In the previous week, It took almost support from the Weekly 9SMA Candle and also still enjoying the support of the upperside movement of 20SMA, 50SMA, 100SMA, and 200SMA.
Nifty 50 Weekly Chart (Fibonacci Chart Status)
The previous week is actually a Dozi candle, and because it is getting resistance from the new all-time high, we need to remove its extension, and below is the new weekly Fibonacci chart, which we will follow going forward.
Nifty 50 Weekly Chart ( Newly Adjusted Fibonacci Chart Status)
In this new chart, we can see, after getting resistance from the new all-time high, it took support at the level of 78.6%, and framed a confused Dozi candle. This shows at least for now, if is taking support from 19300 levels. Now the broad range of 18800 to 19800 is open for some time.
Nifty 50 Index Daily Chart
In the daily Index Chart, on the last day of the trading session, the index managed to close above the previous day's closing levels. The volumes look quite healthy, which states that at least for the coming Monday, Index can continue, if upward journey. If It will slip below 19300, only then we can see the level of 19050 immediately, as for the next support level.
Above 19629 is the immediate level, which can show some bullishness. But 19680 could be a big hurdle, which needs to be breakout decisively. Because candles are traveling still below 20 daily simple moving average.
Nifty 50 Index Hourly Chart
The hourly index has taken support from 9, 20, and 200 Simple moving averages, which shows that the coming week, can see a little more bullishness., till 19609 followed by 19689 levels, which sit at 50 and 100 simple hourly moving averages.
FII Weekly Activity
In the last week, the FII Future Index Open Interest decreased drastically from +13.8K to -25.6K, which also includes the number of +15K, which was created on Friday trading session only.
FIIs Monthly Activity
In July month the FII monthly cash purchase activity was limited to half of the month of June. this shows they started selling again in good numbers i.e. 3546 crores till the start of August month.
Outlook for the NIFTY 50 Index for Coming Week starts from 7th August 2023
The index has formed a bearish candlestick pattern by making lower highs, and lower lows for yet another week. So now unless this formation gets negated strongly, a major upside is unlikely. Till then the broader rangebound trade may continue.
A sharp spike in the US 10-year bond yield is a near-term negative for capital flows to emerging markets. If the US bond yields remain high FPIs are likely to continue selling or at least refrain from buying,
International benchmark Brent crude futures closed at $86.24 a barrel on Friday, rising 2.2 percent during the week. We believe the bullish momentum in crude oil will continue.
The interest rate decision by the Monetary Policy Committee (MPC) meeting due on the 10th of August will be the most important factor awaited by the market participants.
On the global front, the participants will take a cue from the US inflation numbers going to be released on the 10th of August.
The previous week India VIX closed at 10.57 from 10.14. Within five trading sessions, it moved high up to 12, but could not able to sustain. It came down by 5.47% in the last trading session i.e. on Friday. All in all, it continues to remain at dangerously low levels and rose on a closing basis only by 4.32% 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 19380 followed by the level of 19200.
Resistance Level for the Coming Week for NIFTY:
The broader resistance level on the technical chart could be 19620 followed by the level of 19750.
Reading Current Option Data:
The Weekly Option Data indicated that 19,650-19,750 is expected to be the strong resistance area for the Nifty50, whereas 19,400 is likely to be immediate support for the index.
The maximum Call open interest at 19,600 strikes, followed by 20,000 strikes, with meaningful Call writing at 19,600 & 19,900 strikes, whereas the maximum Put open interest was seen at 19,400 strikes, followed by 19,500 strikes, with Put writing at 19,500 & 19,400 strikes.
Overall, the markets will continue to stay defensive and highly stock-specific. US 10 Years bonds Interest rates can play a safe zone for investors who do not want to take risks in equities. So the shift of instruments can be well played in the coming week.
It is advisable to stay invested in defensive quarters like IT, Consumption, PSE, etc. Booking profit on the higher side, many continue due to low India VIX.
A cautious 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.