The Nifty 50 index, crossed its immediate resistance level, 18458.90, and was also able to close above it level. The benchmark index traveled between 329.70 points before it ended towards its high point. The Indian equities extended their up move this time and maintain their positive note on the last day of trading while posting a weekly gain of 295.95 points (+1.63%).
Let us discuss one by one, what the charts on different timeframes are suggesting:
Nifty 50 Index Monthly Chart
On the monthly chart, we are following a horizontal resistance line for the last some weeks. Now we can see that this week, it has broken out and it seems, we can convince ourselves that it is going to touch the previous all-time high soon. For monthly positional trade, we can not see any resistance now in between.
Nifty 50 Index Weekly Chart
So at least this time, after eleven consecutive tries, the Weekly chart is able to cross the major resistance level 18284 successfully and made a huge Marubozo green candle, which shows strong strength for the coming week, as soon as it will break the high of the candle of last week, which is sitting on 18499, level again.
1.0 or 100% of the Fibonacci series is fixed at 18899, which is actually approximately near an all-time high, which is sitting at 18887.60.
We need to remember that the all-time high was touched Intraday on 1st Dec 2022, but the closing on that day was only at 18812.50. but if this time the Nifty 50 Index crossed an all-time high level, it may not be reversed back and we hope that we can see a new all-time high beyond this level too.
Nifty 50 Index Daily Chart
The Nifty 50 index daily chart has shown a clear breakout with a strong Marubozo Green candle, after a long time of struggle. All moving averages are supporting and this time the breakout is volume based, so this is very much clear that this time, even if we will see a quick intraday retracement, in the coming trading days, the buyers are waiting to satisfy their FOMO (Fear of missing out). So it seems it would be buying on dips opportunity for traders also.
FII's Activity in the Previous Week
There are voices that FIIs were selling the Index Future on Friday (26th May 2023), but actually, FIIs are even increasing their index bullish position, and also DIIs and FIIs were net buyers in the cash market. Just to note that FIIs bought 37317 crores during May 2023.
We can showcase the Nifty 50 index and Nifty Bank Index PCR positions, at a glance for references.
Nifty 50 Index - Put Call Ratio - for 1st June Expiry on 26th May 2023
After a long time, we have seen that PUT options surpassed the CALL options by a big difference. So PCR is very bullish.
Bank Nifty - Put Call Ratio - for 1st June Expiry on 26th May - 2023
In Bank Nifty PCR is neck to neck, so it seems that in the coming week, the Bank Nifty index will be the trend decider level.
Impact of Debt Ceiling Issue:
The US debt ceiling is the limit on how much the government can borrow to pay its bills. The debt ceiling issue is not about increasing spending, but about paying for what has already been authorized by Congress.
The US has never defaulted on its debt before (Except in 1979, because of a technical bookkeeping glitch), and doing so could trigger a loss of confidence in its creditworthiness, a spike in interest rates, a plunge in stock prices, and a disruption of payments to millions of Americans and businesses.
Outlook for the NIFTY 50 Index for Coming Week starts from 29th May 2023
The coming week is a trend decider week and we need to understand that whatever trend index will catch, it may stay on it, at least for the short term.
As we studied the chart pattern, we can say that it is a consolidation breakout and it took a lot of time to break either side for a long time, but we need to remember that the US debt ceiling problem is a real problem and we should be ready to accept the challenge for either side directional move in indices.
Considering the consolidation breakout with a significant rally last Friday, the Nifty 50 Index is ready to catch up to its next target of around 18700 levels.
As soon as the levels of 18509 will cross the upside the new upside target will open for 18696 and after that, there is the next target only the all-time high which is the 18887 level.
The index is already enjoying lower support at the range of 18150 to 18300, but if the target is set up to 18887, the new support will set up in the range of 18200 to 18400 levels
Over the past several weeks, the persistently low levels of VIX have remained a concern. The previous week India VIX closed at 11.90 from 13.11. The falling volatility for the second consecutive week also supported bulls.
Support Level for the Coming Week for NIFTY:
The broader support level on the technical chart could be 18300 followed by 18150.
Resistance Level for the Coming Week for NIFTY:
The broader resistance level on the technical chart could be 18590 followed by 18700.
All the sentiments are on the bullish side and all the data are giving us good vibes, but we should remember, the US debt ceiling issue is still not resolved.
In any case, we should be ready for both sides of moves, and this is for sure, that this time it would be a directional move and is going to live for a short term irrespective of direction.
My personal bias is that if this move is on Bullish Side, I will consider it as a Trend Reversal, which can show us many new ALL-TIME-HIGHs, in the coming days/months/years.
Thanks for reading.
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.