ATH levels are back again. Has it run too much too fast? : Weekly Technical Market Analysis : Aug 9 2021

 

• Weekly wide range bullish green breakout candle on Nifty & nearly 5% move wide range green candle  for  Bank Nifty.

• Nifty broke out from a 7-8 week long consolidation making near 3% up move and retraced 0.8%  later while Bank nifty did made big moves and later retraced nearly 1,5% of it.

• Latest nifty daily candle has 3 inside bars forming kind of consolidation triangle pattern that may be indicating further up move while bank nifty latest candle is also inside candle and  kind of small body red candle looks almost like spinning top  both is not on the top of rally but during retracement.

• Nifty has the volatility expansion  while Bank nifty continue the Bollinger band volatility contraction and yet to break out.

• Nifty broke out of the  resistances faced earlier at 15850/15950 along with the rounding number psychological level of 16000 and made new ATH near 16350

• Previous resistances and swing low levels of  15850-15950 & 15500 - 15650 will now act as  support zone and then 15250-15400 levels below also could act as support levels  and 15000 level is seen if that is broken.

• Bank nifty is taking support at previous support zone of 35650-35850 with below supports at 34400-34700 and resistances above are 36000/36500 and has further  previous resistances to clear 36500/37700

• Nifty RSI momentum shifted into bullish zones from sideways. The medium to long term momentum is intact in bullish area.

• The bullish momentum positive reverse divergence identified last week worked and moved the market up and continue in place..

• Bank Nifty momentum daily entered bullish zones but sipped back slightly into sideways during retracement and weekly got into bull zones  while monthly  momentum  maintains to be in bullish zones.

• Nifty ADX trend indicator trend is bullish and rising and with strength  picking up on daily but maintain trend bullishness on weekly and monthly timeframes.

• Bank nifty ADX trend indicator now showing rising strength in the bullish zone of trend on daily timeframes and weekly crossed over to bullish trend and monthly maintain the bullish trend as well.

• Open interest data for Nifty & Bank nifty showing a short buildup based on the futures contracts.

• Highest options call writing for 12 Aug expiry is seen at 16300 with 16400 also seen having more writing while 15500  levels shows highest support point for nifty with 16000 support is close by.

• Bank-nifty options open interest data shows highest call writing at 36000 levels while highest put writing seen at 35000  levels that could act as support for the expiry

• Put call ratio for nifty accordingly is seen 1.1 which is bullish while 0.83  for bank-nifty is  not bullish.

• India VIX  move up ~7% but  slipped ~8%  and settle at 12.6 and continue to be low levels last week after a spike.

• The Nifty IV 11.7 is above HIV 9.3  and  IVP remaining 3  levels which is at the low volatility regime. 

• IT sector index moved up ~4% last week and the bearish divergence seen weekly can not be negated. Therefore need slightly caution even though it is bullish. Dollar strength could be behind the bullishness.

• FMCG moved up ~2.5%  last week and gave up some if it later. Now there is a momentum bearish divergence on weekly  and therefore need cautiously wait for the momentum catch up again.

• Metal moved further more than 2% but has a indecisive doji in index. It had as anticipated the  bullish positive reverse divergence worked well and index shot up 10% previous week doing a clear breakout. Now a bearish momentum exit in the up move but could be cautiously bullish.

• Auto sector moved up 3.5% and later gave up 1% of it last week and continue consolidating  on daily for a potential up move breakout.

• Pharma Earlier after the anticipated weekly bearish momentum divergence that worked previous week to bring a correction of 6% as target and ,Now last week the  weekly bullish momentum reverse divergence could be working although a indecisive doji is seen on weekly but could take it back to further up move if divergence works.

• Last week FII bought > 2600 cr in cash.

• DII bought 896 cr last week

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

• US markets formed bullish green candles weekly candle on all major indices.

• Dollar Index strengthened to near 1% or more at neckline resistance zone of W breakout pattern seen.

• Crude Oil dipped  near 6.5% last week which could be positive for economy.

• USD-INR currency pair was red forming second  spinning top candle on weekly falling below the previous support zone and  could now be dipping further to channel top side next week

• Gold corrected nearly 4% and taken support on previous price last week and could continue bullishness heading to the channel top but with slow momentum.

• India VIX continue at  low 12.6 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 consolidation and made big moves and all time highs although bank nifty continue to not have entered the volatility expansion.

• Overall bias is bullish on momentum and trend with possible consolidation near for some days since it did gained quite a lot in short span and should wait for further break out of bank nifty. 

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

• Positional long trades now can trail the stop loss to new support levels and could hold good until a clear signal of  breaking  of major support zones indicated earlier.