Nifty Weekly Technical Analysis for Week 21 Nov

By | November 20, 2011

Nifty on WoW basis is down 5.5% with a waterfall decline.

Fundamental Factors impacting the fall

European cues and our internal cues high inflation with rising interest rates, policy jam at New Delhi, Rising fiscal deficit and current deficit and Corporate profitability under pressure had led FII to pull out money from India Equities.

The INR has been eroding its value precipitously in recent times,It has seen 14% drop in last 1 year ,most of it coming in last 3 months making it the worst performing currency in Asia.

Decline in Rupee has inflated our import bill also as India is net importer of goods with Oil having the largest portion. This deficit would need to be funded through borrowings or equity investments like FDI. This increasing deficit in turn causes worries for the FII and eventually they pull out Dollars adding pressure on INR. Thus it becomes a vicious cycle difficult to get out of.

Lets have a look on technical factor

Nifty Hourly

Nifty Hourly charts on Friday made a low of 4838 on Friday just a tad above the gap area of 4824-61. Nifty has fallen almost 300 points in matter of 5 trading sessions without any sort of retracement. Hourly indicators are moving out of oversold zone with the recovery seen on last hour on Friday’s session.

4991-98 should be the resistance on upside as shown in rectangle as Nifty consolidated around this level before showing the fall till 4838.

As shown in below chart moving in a wide range between 5400 and 4800,traversing in a channel.4838 if saved next week we will see a relief rally towards 4992-5050 levels.

 

 

 

Nifty Daily

On daily charts Nifty was unable to cross 200 DMA and as discussed in previous week 200 DMA is above 50 SMA which can lead to collapse in Nifty  and it showed its effect last week. Daily channel trend line comes at 4522 levels. So if low of 4720 gets taken of or broken on a closing basis we are in for another 200 points fall as per trend line theory.

I did a brief comparison last time when Nifty showed such waterfall declines 5890-5436 was the decline in 8 trading sessions, Currently we have fallen from 5317-4838 in matter of 7 trading sessions. Stock Markets never move in straight line, Fresh shorts does not make a good risk to reward ratio at current juncture as Nifty took support at lower end of trendline on Friday.

Wait for Retracement till 4991, 5050 to take fresh shorts.

 

How to identify the current down trend is Weakening?

Going by classical TA theory for current downtrend to stop lower lows should stop making ie. Market should not close below 4838 on Monday if the current down trend needs to come to an end.

Next week being expiry expect heightened volatility and wild swings in Nifty so would advise traders to be cautious with there positions and do not commit large capitals in such market.

 

Nifty Weekly

Nifty broke the Weekly trendline which is bearish in short term from last 3 weeks nifty has been declining falling 8.2% in 3 weeks without any significant retracement. Break of 4838 will lead to another fall till 4758 and eventual break of 4720 will lead to 4522 and 4488 as per weekly trend lines.

Observe  the green circles in above chart after 3 weeks of decline we had a relief rally of 4%, Current structure we had decline by 3 weeks in a row and we can see a relief rally provided that 4838 should hold next week.

 

 

Nifty Monthly

On Monthly charts Nifty has just closed above its Monthly trendline which leave some hopes for Bulls .So next week just watch for the support of 4838-24 range on closing basis. Close below this will lead to another 4-5% fall in Nifty if held i accept a rally till 5050-5145 levels.

Nifty Future Volume Chart

Highest volume bars are at 4998,5050 and 5150 levels which becomes the  resistance in Upside in Nifty and shall be used to short Nifty with 20 points sl and booking longs taken at lower levels.

As per Options data no strike price has a Open interest of 80 Lakh while we are entering in last week on expiry which shows the confusion market participants are having on nifty range.

Last Week trend deciding level was 5169 and if someone has taken position below it has been rewarded handsomely, I would always advise to keep booking part profits of mentioned support levels.

Nifty Trend Deciding Level:4922

Resistance:4964,4998,5050,5106 and 5150

Support:4887,4838,4758,4720,4675

 

From last 4  trading days except Friday  market after opening goes in 30 points range and the move starts only after 2 PM after the EU cues gets absorbed by traders.

 

 
Follow on Facebook during Market Hours:  http://www.facebook.com/pages/Brameshs-Tech/140117182685863

7 thoughts on “Nifty Weekly Technical Analysis for Week 21 Nov

  1. sant

    thanku sir…but do have any views on my second question about selecting strikes of the scripts..and how to conclude which strike is helpfull and how to understand if script is bullish or bearish based on the OI at specific strikes..

  2. sant

    pls do answer ma question sir..hope i can learn something from u

  3. Bramesh Post author

    Hi Sir,

    For OI follow the below mentioned 4 points
    BULLISH:-
    1. Price rise along with OI rise(New bull positions)
    2.Price rise with OI decrease(Short covering & delivery picked
    up)
    BEARISH:-
    1.Price down with OI down(Bull/Bear Profit Booking)
    2.Price down with OI rising(Bearish positions added or weak
    hands unable to exit, stuck with positions)

    rgds,
    Bramesh

  4. sant

    Hi…
    nice analysis…

    I have a query on OI…

    Calls OI-Puts OI = +ve, means bearish..

    calls OI-Puts OI = -ve, means bullish…am i right..?? wats ur views and extra random thoughts on this counter of OI..

    how does analysing this OI will help to select better stock n better strike while trading in options..how you will select..?? ur views pls..

    Thanku ..

Leave a Reply