Crash or Consolidate : Market Analysis: April 26 2021

 

• 3rd weekly doji candle in a row forming a lower low lower high.

• Weekly timeframe lost its momentum and fallen into sideways zone joining daily which has been consolidating sideways since feb 19th. 

• While ADX trend seen rising on daily on the bearish side , on weekly although the trend is bearish the ADX is not  rising yet and is with little strength. Monthly is the remaining timeframe with both momentum and trend continuing to be bullish.

• So market still thinks long term bullish and very short term bearish.

• Last week market fall off from 100 day moving average support also.

• Two window gap pattern on the upside 14385-14560 levels and  14652-14785 and clearing both of these coming week may not easy task.14825 50 day moving average also exit just above it.

• 13600 is the next swing low support level and below tat 13130 if it looses grip. A major crash due too any pandemic sentiment also could find support at 12000 levels worst case.

• April expiry options open interest has good support at 14000 and major resistance only at 15000 although 1% short buildup was seen on nifty futures.

• Bank nifty futures show long unwinding meaning price falling and open interest also falling.The options open interest has support at 29000 and resistnce at 33000 for April expiry. 

• Bank nifty has support near 29000  levels.it has fallen off long back from both 50 and 100 day moving average.

• Bank nifty Momentum climbed back to sideways zone last week after a falloff into bearish zones the previous week

• However Bollinger bands continues very clearly showing a intense bearishness on the bank index than the nifty. In-fact even  monthly timeframe has momentum slipped down from bullish zones unlike nifty. Daily ADX has taken a  turn which could be indicating of temporary stop of bearishness.

• FII's where sellers last 4 days continuous but DII's where buying.

• India Vix went above 23 levels last week and same volatility could continue coming week as well with market under fear grip. 

• Market could also consolidate and remain the 14000 to 14800 levels and try to remain in the trendline channel and not make any crash like last march since possibilities of tackling pandemic crisis are more this time around comparatively.

• Therefore It is not wise to take both bullish or bearish trading swing positions at this stage of uncertainty .However intraday positions could be take considering the support and resistance level mentioned above.

Choppy till trend emerges : Nifty Weekly Analysis : April 19 2021

 

• Another week with yet another indecisive doji candlestick pattern forming yet another new positive reverse divergence on momentum while previous one didn't worked out though it attempted and moved above previous week high.
• Last week nifty once again took support near 14250 levels and bounced up for 3 days.

• A window gap resistance in the 14650-14790 levels along with a 50 day moving average hurdle at 14860 levels indicate that a bullish call can be taken only after a close above this.

• Same time the previous swing low levels around 14250 seems to be acting as a good support for now in confluence with FIB 61 retracement also at same levels.

• 14000 could act as interim support and 13600 levels could be downside levels if the above support is broken and beyond that it cease to be consolidation and prolonged bearishness could come in.

• momentum is still intact weekly and monthly timeframes while daily is continues to be sideways once gain reminding this is consolidation in market. Reading along with change in polarity and bounce up on weekly still does not allow to call bearishness in market. ADX trend is bearish but not with great strength like bank nifty.

• open interest in nifty futures shows long buildup. Options data is bearish overall which shows highest call writing seen at 15000 while support is seen at 14000.

• Bank nifty dipped with a gap down last Monday nearby 2000 points and later 3 days recovered most of it but the gap is yet to be conquered by few points. But now momentum on daily thereby has made a range shift from bearish to sideways.

• Bank nifty is far away from 50 day moving average of 34700.Only a close above 33000 in confluence with FIB 61% and open interest levels would make bank nifty into bullish zones. Retest of below levels and taking previous major January swing low support at 29700 cannot be ruled out if it cannot sustain the bounce back move. However keep in mind that the Weekly and monthly momentum are not longer in bullish zones unlike nifty. ADX trend indicator are seen rising up in strength on bearish side.

• open interest in bank nifty futures shows long unwinding meaning both price and open interest is falling. options data is bearish overall with major resistance seen at 33000 and support at 31000

• FIIs are  not selling big is a relief which again could mean this could be consolidation.

• India VIX last week shot up 16% on Monday when lockdown fears came in  while later it cooled down 11% next day and  finally closed at 20.4 levels on Friday. Volatility could continue to there coming weeks as fear resides very much in the market very much. daily movements of indexes are very high and markets could remain choppy before a trend emerges from it eventually.

• Charts saying nifty is consolidating and bank nifty relatively weak but attempted to join nifty in the sideways movements , but the prevailing sentiments uncertainty could make it tough to trade in the choppiness. Non directional options strategies with a good range can be applied. Plain longs may not be wise unless a confirmation of it comes in. A blind shorting also wont work for swing trades as market are not ready to make a trending fall. However Intraday Weekly options Calls at 15000 and 33000 levels can be sold with strict stop loss if big trending moves are not seen.

Consolidation to continue or banknifty to drag it down : Market Analysis April 12 2021

 

• Nifty ended with weekly Doji candle with indecisiveness.
• A positive reverse divergence continue to be valid that could still take market up to previous high.

• Bollinger band showing consolidation on nifty and taken support on 50 day moving average.

• Trend analysis of ADX show bearishness on daily but strength of same is moving down while Monthly trend is still bullish.

• Weekly monthly timeframe rsi momentum is intact in bullish zones.

• Open interest futures and option showing bearishness for April 15 expiry. Options data is showing highest resistance at 15500 as well as 15000 more or less equal while the supports are seen at 14500 and 13500 more or less equal. immediate levels could be on between 14500 and 15000.

• Put call ratio of 1.28 is bullish

• Banknifty has a bullish momentum divergence on daily and also a positive reverse divergence on weekly both indicating an up move.

• Bollinger band shows clear bearishness below the 50 day moving average unlike nifty.

• Trend analysis of ADX show bearishness on daily and the strength of same is rising up unlike nifty.

• Weekly/monthly timeframe rsi momentum has broken away towards the sideways zone unlike nifty.

• Monthly trend is still bullish on bank nifty.

• Open interest futures and option showing bearishness on bank nifty. immediate levels could be on between 30000 and 33000 for April 15 expiry.

• Put call ratio of 1.28 is not bullish unlike nifty.

• India VIX fall 2.6% on Friday closing below 20 levels indicating cooling of choppiness and fear since last few days.

• FII's  were net seller mostly last week which is cause of concern.

• IT companies declaring results next week could bring in cheer but only if results are good since most of these stock are at high levels.

• Overall momentum indications give a probability of rebound from the current levels but the bank nifty in clear bearish movements not supporting nifty make me have a sideways view for next week. A major bearishness is not likely.

• Non directional option strategies risk defined and IT stock momentum breakout on result could be tried.

Option Set up of the week : April W1

Current Nifty spot 14867

Short NIFTY08Apr2021.15050CE 1 lot @64.40

Long NIFTY08Apr2021.14900CE 1 lot @119.00

Maximum Profit Potential= 7,155.00/-

Maximum Loss Risk =-4,095.00

Breakeven level =14,954.60

Capital needed approx.     < 25000/-

Risk reward 1:1.3

Exit if profit >15-25% of capital or Loss > 7000 

Probability of profit = 40%

Reason : nifty could move with current momentum and cross 15000 this week.

Moving up after correction: Market Analysis : April 5 2021

 

• One of the shortest trading week went by but it made up for it pulling up market above 14850 levels from the dip it  made at previous week low of 14264 which could be a major support ahead.

• Monthly doji pattern indicating uncertainty among participants the whole of march due to various events like  us yields rising, Biden package covid wave2 DII rebalancing etc.

• Monthly momentum in bullish zones itself and trend strength seen rising

• Weekly change in polarity may be working showing a bounce from previous support

• Weekly momentum has taken support and rising in bullish zones but trend continue to be bullish but with strength is downwards

• Weekly positive reverse divergence indicating an up move towards targets of 15430 all time levels again

• Daily momentum is in sideways itself but the downwards moves seems too arrested if u notice the  Bollinger bands although price consolidation is evident. Daily trend is downwards but with less strength.

• 50 day moving average has not yet been conquered decisively as close was below it. 

• Closed above 38 FIB retracement and any close above fib 23 levels would also mean 15000 is reclaimed

• Futures open interest buildup is short covering which means those who placed bets on a reversal of market are  now covering themselves.

• Option open interest showing 16000 for April 8 expiry is deceiving due to hedge positions taken. But 15000 level are seen to be having a large call writing while 14700 can be seen as support level.

• India vix dropped 2.4% last week end at 19.99 which also gives indication that fear in market has gone down a bit last few days at least and could also mean market to move up as long it does not shoot up to 22 levels of previous week

• india vix  based range of nifty movements could be  expected between from 14489- 15245

• FII selling was only on march 31st that was compensated by DII buying.

• Sector wise long build ups were seen in metals and private banks sectors

• Bank nifty also is short covering on open interest on futures while option open interest suggest resistance at 35000 levels and support at 33500 levels. Bank nifty also has the weekly positive divergence and change in polarity indicating an up move to previous high if it manage to close above the 50 dma at near 34000 levels and then 23 FIB level near  36000 levels both seen are major resistance for it on charts in confluence with what levels suggested by OI.

•  As summary my view will turn to bullish for the week the moment closure occur above 15000 even though a monthly basis consolidation continue until breaks above previous all time high of 15400 levels.