Was it just a shake out ?Weekly Market Analysis :June 21 2021

 

• A bearish candle after 5 continuous bullish weeks ,still made another higher high and all time high.

• Weekly spinning top candle is bearish

• Latest Daily candle hammer-could be slightly bullish on confirmation since during a small downtrend. 

• Nifty -moved up 2 days and did 3 days of 450 point correction with a harsh one on Friday to dip it to 15450 support levels last week before recovering back some of the momentum and settling to close to 15683.

• Bank nifty 15o0 point correction before it recovered 650 of it to still closing below previous close 

• Bank nifty has a spinning top bearish candle pattern

• Bank nifty also has 2 days of up-move and 3 days down.

• Last week Nifty broke the support at 15600 levels from where is bounced up and where it also had  at 20 day moving average and  previous resistance too but closed above it.

• Nifty Fibonacci 23 retracement level of 15500-15300 levels is in confluences with the previous resistance that has turned to be support now.15000 would be next level below it which had previous resistance

• Nifty 15800 levels has previous resistances and 16000 would be psychological round number and Fibonacci extension 50 support area.

• Bank Nifty fall off from the 20 moving average support and currently at 34600 level closing above FIB 23.it has 33300/33600 support levels which is in confluence with Fibonacci 38 and previous resistance. Any breaking of FIB 61 levels of 32000 could mean a major downtrend.

• Bank-nifty first resistance at 35600/35800 levels of previous resistance from where it dipped last time and above that resistance at previous swing high of 36500 and then all time levels of 37700 levels would be resistance points.

• Last week Nifty broke the support at 15600 levels from where is bounced up and where it also had  at 20 day moving average and  previous resistance too but closed above it.

• Nifty Fibonacci 23 retracement level of 15500-15300 levels is in confluences with the previous resistance that has turned to be support now.15000 would be next level below it which had previous resistance

• Nifty 15800 levels has previous resistances and 16000 would be psychological round number and Fibonacci extension 50 support area.

• Bank Nifty fall off from the 20 moving average support and currently at 34600 level closing above FIB 23.it has 33300/33600 support levels which is in confluence with Fibonacci 38 and previous resistance. Any breaking of Fib 61 levels of 32000 could mean a major downtrend.

• Bank-nifty first resistance at 35600/35800 levels of previous resistance from where it dipped last time and above that resistance at previous swing high of 36500 and then all time levels of 37700 levels would be resistance points.

• Nifty momentum still daily/weekly/monthly within bullish zones

• Nifty Momentum daily had a bearish divergence on daily chart where price is rising and momentum slowing down that pulled it down to the 15450 levels but managed to recover the momentum and take support in bull zones again.

• Nifty daily now has a bullish positive reverse divergence that could still potentially take it back to all time high on confirmation if it goes above Friday candle high.

• Nifty ADX trend indicator cross to bearish areas on daily timeframe and is rising with reasonable strength while weekly and monthly trend remain bullish.

• Bank Nifty momentum daily continues to be in sideways zone and falling. Weekly is struggling to hold the bullish area while monthly momentum is still taking support at 60 in the bullish zone.

• Bank nifty has ADX trend indicator is in bearish side and rising with strength turning upwards on daily time frame. The trend continue to be in bullish side on medium & long term timeframes with flat strength.

• Open interest data for Nifty showing a short covering while bank-nifty is showing a short buildup based on the futures contracts

• Highest options call writing for 17 june expiry is seen at 16000 with 15800 also seen having more writing while 15000 levels shows major support point for nifty with 15500 support also ahead of it.

• Bank-nifty options open interest data shows highest call writing at 35000 levels while highest put writing seen at 34000  levels that could act as support for the monthly expiry

• Put call ratio for nifty accordingly is seen 1.01 which is mildly bullish while 0.71 for bank-nifty is not bullish.

• India VIX remain flat at very low levels of 14.8.Implied volatility is above HIV with IVP remaining 2.4 levels which is at the new volatility regime.

• IT sector is bullish with strength in momentum and trend on short/medium/long term charts. The FMCG sector was performing despite market bearishness last week.

• We discussed Metal as showing bearish momentum divergence on weekly and it  did correct well. It could take momentum 40 support and consolidate for some period.

• Auto sector bullish momentum divergence failed on daily and it dipped into sideways last week and could be back to bullishness after few weeks if the momentum does not fall into sideways on weekly.

• Pharma and Infra on short term turned sideways but medium and long term momentum is intact.

• Last week on Friday when market corrected and did the v shape recovery In the cash market. Earlier in the week itself they had sold near 2500 crore over 3-4 days. DII also turned into buying moderately after couple of days of selling last week.

• FII were buying 3100 crores is positive with June net buying from FII is 5800 crores while DII where net selling 2300 crore same month till now. They are net longs on derivatives of FII/DII have dipped bit this month so far.

• US markets had the major Fed meeting last week and outcomes jittered all markets including our to certain extend and then recovered soon enough. Both Dow and S&P showing bearish weekly candles.

• Dollar Index gained strength and showed bullish momentum o move from 90 to 92 levels last week and continue heading up resistances seen at 92.5 and 93.5 levels.
• We discussed and suggested that going long on  USD-INR currency pair was not a bad idea in last weekly analysis and it did exactly same and gained near 1.5% last week closing near 74.3 levels at a previous resistance. 

• Gold crashed more nearly 6.5% last week after it was seen consolidating earlier and currently seen back into the weekly channel from where it had done a false breakout earlier. currently at a support zone of previous resistance and close by another support zone 100 point down and consolidations could be happening for some period until momentum picks up again. Probably good time to invest in for medium term.

• If your view is mildly bearish could go for a bull put spread on nifty with strike selected at support resistance zones we discussed for this expiry could work if consolidation and not major bearish moves does not happen next week and same time if market moves up also it could of benefit.

• A 34000-35000 bank nifty strangle with hedges at break even points can give near 1:1 risk reward with the view that this index has resistance at 35K and supports near 34000 on oi and charts.

• Markets did a shake out of weak hands last week and got back into business and probably it was a healthy correction.

• Nifty will hit 16000 sooner but may be consolidating before that.

• The daily charts continue to show that it is at momentum support and a potential bullish divergence move up.

• Nifty Trend crossover to bearishness and Bank nifty falling of 20 moving average support with sideways momentum and trend is reason for a caution but indications of a consolidation ahead and not crash is what could be seen.

• Positional long trades would hold good until a clear signal of  breaking  of major support zones indicated earlier, there is no point in exiting or shorting as of now.

• Intraday even with low volatility regime for some reason is giving choppiness and furious corrections which probably part of bull run behavior.