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Nifty - Only Sustainability above 18604 will force a Bullish Directional Move

We have seen earlier that the US and European markets started to recover from January 2023, but Indian markets were disconnected due to the Adani-Hindenburg fiasco. But now, after a disconnect earlier in the year, the Nifty 50 Index has started aligning with global markets and is expected to move up.

In our previous technical journal, we suggest that we are looking for a directional move on either side, but the benchmark index shows approximately, very less or we can say no movement in the whole week. All five trading sessions oscillated in the range of 197.90 points and the Nifty 50 Index ended up with a negligible gain of 34.75 points (+0.19%) only.

Why did it happen? Because we need to understand that the benchmark index is consolidating at a very crucial key level throughout the week. Nifty 50 Index is looking for direction and it is hovering near an all-time high, in spite of the NiftyBanking Index already crossing its previous all-time high and consolidating on the higher side of its peak.

Let us discuss, what the technical chart suggesting us for the coming week

Nifty 50 Index Monthly Chart

The monthly chart pattern of the index is clearly showing us that it is maintaining the close level of the previous month, which was stand at 18534.40. This could be a good sign for the coming week. Respecting the closing level of the previous month could take it on the higher side because the lower side seems capped as of now.

Nifty -50 Index Weekly Chart

In our previous technical journal, we suggested that the Fibonacci pattern can move upside from 78.6% to 100%. And as we can see that even though it is moved with a red Dozi candle, even it is already started moving higher side.

We have added the Fibonacci extension part to show that if 100% is achieved once, it can resume its journey towards the next level on the higher side and the next level would be 161.8%, which comes roughly stands at 20153, as per the chart pattern.

But always remember that, if any worst retracement happened, it could go back to test the level of 50%, which stands at 17800, the strongest support for the short term, as of now.

As of now, we do not see, any big retracement, because all moving averages are supporting the trend. and the trend is always a friend. Don't short against a bullish trend and vis-a-verse, even if it is on the highest level. Just ride the trend with trailing stop loss.

As we already discussed, that all-time high is not too far from here, because the benchmark index is closed at a crucial point, where the market can able to finalize any direction. So in the case of Gapup opening of the Market on Monday, we do not need to jump on the bullish trade immediately, instead, we need to wait for some time to settle down the market, because the next level will be an all-time high level, where volatility can be invited, because of profit taking bouts by traders, as the market is facing Low India VIX regularly for quite some time.

Nifty 50 Index Daily Chart

The Nifty 50 index, daily chart is interestingly, showing that it has filled up the weekly GAP, created by the previous week's trading sessions. We can believe that the downside is limited from here and it is being capped as of now.

Always remember, when all Simple moving average trendlines are collected in a single point, it gives us a very big move on either side and this time positively on the higher side. As we can see this time it is happening on Daily Chart after a brief consolidation, it seems all the Odds are with the breakout side.

Nifty 50 Index Hourly Chart

This time we are adding here the Nifty 50 Index hourly chart to make the picture perfect more clear.

All five sessions in the previous week were largely consolidatory in nature; the markets stayed lacking any direction throughout the week and consolidated just below key resistance and breakout levels. So it is called CUSP.

The index has caged itself in the 5-day previous trading session range, as we have shown between a rectangular image. We need to wait to see, which side the range will break, If it is the upper side, we will be bullish for the week and marching towards all-time high levels. But if Index has not ready to leave the range of this rectangular image, then once again we can see the consolidating market for the week.

Opening Gap Up or gap down above or below the rectangular range, will only decide the final direction for the week.

FIIs Weekly Activities:

FIIs are still bullish in the cash market. Here we can see that the FIIs future index position is not significant to bring any big move on either side. We can say that they are alike absent from the derivative market as of now. Let us see, if they make any big positions in the coming week and especially on which side. If we see from the 8th June expiry perspective, they have made bullish positions for Monday, with a 476 cr bullish side, but it is not a big number to bring a big move.

Outlook for the NIFTY 50 Index for Coming Week starts from 5th Jun 2023

No doubt, this time all ODDS are with a bullish directional market. because the market ends up on a crucial level and is ready for a breakout.

The global trade setup is buoyant; we are set to get an extremely robust handover on Monday.

The markets are set to open on a stronger note and will definitely attempt an upside breakout, but this will be possible only if after the GAP UP opening of the market, the Nifty 50 index should not break down the 18604 level again on the downside. We can not rule out that this level can be retested, but If it sustains above with good volumes and for a longer duration, the breakout attempt would become successful and clear the passage for reaching all-time high levels.

We already suggested in our previous technical journal, why the level of 18604, is very crucial, and important to watch.

India VIX

Over the past several weeks, the persistently low levels of VIX have remained a concern. The previous week India VIX closed at 11.12 from 11.90. The falling volatility for the third consecutive week also supported bulls, but the main concern is, it can prone to profit-booking bouts at higher levels.

Support Level for the Coming Week for NIFTY:

The broader support level on the technical chart could be 18480 followed by 18300.

The Options data shows 18500 as strong support, and it is also seen shifting its resistance levels higher.

Resistance Level for the Coming Week for NIFTY:

The broader resistance level on the technical chart could be 18650 followed by 18785.

I have shared my personal bias, in the technical journal of the previous week and I am still stick to it, if this time sustainable directional movement happened, it will stay for a longer time than usual.

Thanks for reading.

Keep Trading

Stay Invested


Neeraj Bhatia

(Managing Director)

Disclaimer: I am not a SEBI Registered technical Analyst, so consult your financial advisor, before taking any trade. This technical weekly post is only for learning purposes and is free of charge. The views written here are completely my personal view only. I am not suggesting here anyone to follow my views. I do not have any WhatsApp ID or Telegram ID related to it.

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