Will the breakout sustain?: Weekly Market Technical Analysis : July 19 2021

 

• Weekly bullish candle on Nifty & Bank Nifty.

• Nifty has 5 higher high candle formation entire last week.

• Nifty & Bank Nifty broke out from previous resistance zone. Bank nifty broke out of a inverse head & shoulder neckline.

• Latest nifty daily candle hammer-on uptrend at resistance

• Bank nifty has a open=high candle pattern on daily bearish

• Nifty & Bank nifty both shows beginning of Bollinger band volatility expansion from earlier narrow range.

• Nifty nearer to a rounding number psychological level of 16000 and resistances can be expected.

• Earlie resistances now could act as support and levels of  15750 - 15900 are support zone and then 15500-15600 levels below acting good previous swing low supports and 15000 level are seen if that is broken

• Bank nifty has 3 previous resistances to clear 36500/37700 and has 34300-34650 levels as next supports below.

• Nifty RSI momentum climbed to bullish zones last week and retains it. Also the medium to long term momentum is intact in bullish area,

• Nifty weekly has a bearish momentum divergence that could pull it back to 15450 levels if it works out.

• Bank Nifty momentum daily climbed into bullishness but could not sustain it and slipped slightly back into sideways zone on  daily  .Weekly and monthly momentum  maintains to be in bullish zones.

• Nifty & Bank Nifty ADX trend indicator are in  bullish areas on daily, weekly and monthly timeframes

• Open interest data for Nifty showing a long unwinding and Bank nifty showing short buildup based on the futures contracts which is bearish.

• Highest options call writing for 01 july expiry is seen at 16200 with 16000 also seen having more writing while 15900  levels shows highest  support point for nifty with 15800 support is close by.

• Bank-nifty options open interest data shows highest call writing at 36000 levels while highest put writing seen at 35500  levels that could act as support for the expiry

• Put call ratio for nifty accordingly is seen 1.03 which is bullish while 0.71  for bank-nifty is not bullish.

• India VIX  fall more than 20%  to historic lowest levels of 10.5  and settled at 11.7 last week.

• The Nifty IV 11.6 is above HIV 6.9  and  IVP remaining 2  levels which is at the new low volatility regime. 

• IT sector corrected more than 2% and later gave up some of it  but bearish divergence seen weekly can not be negated. 

• FMCG is consolidating sideways last week forming a weekly doji and at  previous resistance zone and therefore need wait for the momentum catch up.

• Metal has the bullish positive reverse divergence seem to be working and market ended green last week. Momentum on daily is now in bullish zones and could expect a breakout.

• Auto sector formed a bearish inside bar and consolidating on daily and weekly and may take time to turn bullish again.

• Pharma moved up 2.5% last week and broke out into an all time high levels. but weekly has a bearish momentum divergence that could pull it back a bit on weekly basis. sector is bullish on all timeframes.

• Last week FII sold> 2500 cr in cash.

• DII bought 3200 cr last that kept the market up last week

• The net longs on derivatives of FII/DII moved up last week.

• India VIX has fallen to lowest 11.4 levels and any spike could benefit Vega positive strategies on options like double calendar.

• Therefore Nifty calendar spreads hedged is always bad idea for coming week due to v shape moves often.

• Markets broke out from major resistance zone but lost momentum end of week and Bollinger band started expanding while bank nifty need catch up with resistances, with the improved momentum and trend overall bias is bullish with caution since weekly bearish divergence and FII selling concern.

• India vix are at difficult low volatile levels for option traders both buyers and sellers and non directional trades are only to be thought of. Will there be immediate mean reversion spike or will it remain at this for long is uncertain.

• 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.