Recovered from small correction and at resistance ; Weekly Market Analysis : Oct 11 2021

 

• Nifty  formed Weekly inside bar green candle with  ~3% up move forming a consolidation triangular pattern that could break either side. Yet another recovery bounce from a small correction.

• Bank Nifty also formed weekly inside bar candle with ~1% up move forming a consolidation pattern hat could break either side.

• Latest nifty daily candle is a indecisive doji  candle resisting at previous resistance similar to the previous week Friday.

• while bank nifty latest candle is more like an inverted  hammer candle at a previous support level.

• It was higher high closing that happened last week on bank nifty if you look at daily moves last week.nifty however dipped on wednesday but but recovered to close higher by end of week

• Nifty & Bank nifty is above the median moving band 20 moving average support after it had earlier slipped from it.Also a volatility contraction  can be noticed on nifty daily Bollinger band that could be indicating some consolidation period although the band is seen heading higher and not sideways.

• The nifty resistance would 17900-17950 and then 18000 while previous support levels at 17700-17800 and 17600-17650 levels swing low levels and below that at 17400-17450 levels.

• Bank nifty now has  resistance near 38000-38100 and then 38350  and below supports are at 37700-37800 and then 36900-37100  and near 36300-36500 level below it.

• Nifty has the momentum intact while Bank Nifty  has not regained from the sideways  momentum yet 0n daily timeframe while weekly and monthly remain bullish on both indices.

• Bank Nifty has momentum bullish reverse divergence on weekly while same may work out on nifty daily timeframe.

• Nifty has bearish momentum divergences on weekly timeframe.

• Nifty & Bank Nifty ADX trend indicator still in bullish zones with ADX trend strength showing signs of up move  on daily timeframe while trend still bullish and rising on weekly and monthly timeframes as well.

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

• Highest options call writing for Oct 14  weekly  expiry is seen at 18000 with 15000 also seen having more writing while 17800  levels shows highest support point for nifty with 17000 support is next highest support.

• Bank-nifty options open interest data shows highest call writing at 38000 and 39000 levels while highest put writing seen at 37000 and 37500 levels that could act as support for the expiry

• Put call ratio for nifty accordingly is seen 1.05  which is not  bullish while 0.73 for bank-nifty is  not  bullish.

• India VIX  fall  ~9% and settled at 15.65

• The Nifty IV 14.7  is above HIV 11.4  and  IVP at 26%  levels which seems outside of very low volatility regime and forming new range.

• IT sector  recovered ~6% from previous week correction of ~7.25% and weekly  bullish reverse divergence is working progress indicting potential further up moves and Dollar strength has broken out and moving up and work from home continues and momentum on short term also back in bull zones.may be time to stock pick again.

• FMCG corrected  further ~1 % last week and formed a bearish candle with  daily momentum is sideways need wait for slipped momentum to catch up.

• Metal moved down further forming gravestone doji  which is indecisive even though  the momentum maintain bullishness and so pick stock after the resistance is taken out.

• Auto sector  moved further up than ~5%  and at resistance zone has momentum in all timeframes and picking stocks can be made a it could be double bottom breakout that may be happening.

• Pharma sector  ended bearish  last week and on edge of bullish momentum on short and medium term and formed an inverted hammer pattern but has immediate resistance above would need momentum to sustain back and price to move above the resistance on daily in order to looks at stocks in the sector

• Reality moved up ~3 % up move forming a flag breakout pattern  and is having a weekly cup and handle breakout pattern in progress and last two week believe it or not it made 30% up move ..Sector is bullish in momentum and trend on all timeframes and time for stock picking for long entry. 

• Last week FII sold~ 3685 cr in cash.

• DII bought > 3450 cr last week

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

• US markets all of the  indices bounced up last week red after a small dip earlier.

• Dollar Index had gained strength but closed indecisive doji near a previous resistance zone after the previous weeks breakout move.

• USD-INR currency pair broke out of a previous resistance and trend line channel and moved nearly 1.4% and ended hitting another previous resistance at 75+ levels and has channel top resistance also ahead.

• Crude Oil moved >5% further breaking out of a multi year resistance zone and closing near 79 levels which is not at all good for indian economy.

• Gold ended red with indecisive small body candle and seen attempting to get back into the support zone from where it had slipped last week which has resistance now.

• Indices made another V shape recovery from a yet another small correction of last week and at a resistance zone with the momentum and trend on short term intact on both indices while bank nifty resisting on short term while trend remain bullish.

• The bias for short term is cautious bullishness as the markets are in no mood to even make larger correction and bouncing up.

• India vix which had earlier weeks shot up to near 19 level last week but dipped further 9% and settled to near 15.6 levels there could be chance of it rising mean reverted upwards.

• Double diagonal also could be applied to benefit from the vega.Using Vertical Spreads in options makes more sense to give more probable wins as compared to naked long/short  positions during these level where it is decisive of a bounce or a down move. While intraday choppiness could continue make intraday trades difficult Positional long trades need be alert on when the support levels are taken away or when to trail as and when resistances are taken away.

More corrections ahead ? Weekly Market Analysis : October 4 2021

 

• Nifty  formed Weekly bearish candle (nearly a dark cloud cover) with  ~3% fall from an all time high  and later recovered only ~0.5% up 

• Bank Nifty also formed weekly bearish candle with ~4% fall from all time high and later recovered only ~1% of it.

• Latest nifty daily candle is a indecisive dragonfly doji  candle during a downtrend may suggest a reversal to upside if confirmed.

• while bank nifty latest candle is a hammer candle at a support which could be signalling  presence of bulls and may be reversal to upside if confirmed.

• Nifty & Bank nifty has moved away from the upper band and slipped from the median moving band 20 moving average.

• Both indices corrected last week close to 3 and 4% respectively.

• The nifty resistance would 17600-17650 and then 17950/18000 while previous support levels at 17350-17450 and 17250-17300 levels swing low levels and below that at 17000-17150 levels.

• Bank nifty now has  resistance near 37700-37800 and then 3800-38100 and below supports are at 36900-37100 and then 36300-36500  and near 35600-35900 level below it.

• Both Nifty & Bank Nifty  lost some of the momentum and slipped into sideways on all daily timeframe while weekly and monthly remain bullish.

• Bank Nifty has momentum bullish reverse divergence on weekly while same may work out on nifty daily timeframe.

• Nifty & Bank nifty met target of last week identified bearish momentum divergences on daily

• Nifty & Bank Nifty ADX trend indicator crossed over to bearish zone with ADX trend strength falling   on daily timeframe while trend still bullish and rising on weekly and monthly timeframes as well.

• Open interest data for Nifty showing long unwinding & Bank nifty also showing a long unwinding  based on the futures contracts.

• Highest options call writing for Oct 7  weekly  expiry is seen at 18500 with 18000 also seen having more writing while 17500  levels shows highest support point for nifty with 17400 support is next highest support.

• Bank-nifty options open interest data shows highest call writing at 38000 and 40000 levels while highest put writing seen at 37000 and 36000 levels that could act as support for the expiry

• Put call ratio for nifty accordingly is seen 0.71  which is not  bullish while 0.72 for bank-nifty is  not  bullish.

• India VIX  shot up ~12% and then fall ~9% again and settled at 17.2

• The Nifty IV 16.2  is above HIV 9.6  and  IVP at 32%  levels which seems outside of very low volatility regime and forming new range.

• IT sector corrected near 7.25% last week after previous week ending gravestone candle and bearish divergence worked for reversal as signalled previous week..Dollar strength has broken out and moving up and work from home continues and therefore sector may not correct much but need wait for the sideways slipped momentum to catch up.

• FMCG corrected  near 3.3 % last week and formed a dragonfly doji that  is indecisive and daily momentum slipped and  expectation is that the up move in this defensive sector is likely to continue but need wait for slipped momentum to catch up..

• Metal moved up > 2.5% after the  bounce back hammer earlier week  and bullish reverse divergence on weekly  is seem to be working  and stock could be  picked up if it sustains the momentum coming week.

• Auto sector  moved further up than ~4%  but gave up at settled with ~1.5% move last week  and continue gained short term momentum with price above the support zone but weekly momentum on the edge of bullish zones on medium term and may need wait for it to catch up little bit more before picking stocks as index seem to be heading towards a double bottom resistance before breakout on weekly.

• Pharma sector  moved up more than 2% last week and climbed to bullish zones on short and medium term and formed a hammer pattern but has immediate resistance above would need momentum to sustain back and price to move above the resistance on daily in order to looks at stocks in the sector

• Reality moved up much but gave up to settle with ~1.5 % up move  is having a weekly cup and handle breakout pattern in progress and last two week believe it or not it made 30% up move ..Sector is bullish in momentum and trend on all timeframes and time for stock picking for long entry. 

• Last week FII sold~ 6500 cr in cash.

• DII bought > 4300 cr last week

• The net longs on derivatives of FII/DII has dipped last week.

• US markets all of the  indices closed red while previous week was a bounce  from to fed meeting outcomes.

• Dollar Index further gained strength last week and broke out of a major resistance zone close by.

• USD-INR currency pair heading up closed green near 1% this week as well and at previous resistance 74.3 levels and has channel top resistance also ahead.

• Crude Oil moved > 24% in the last 5 weeks at resistance zone at 75-77 levels which is not good for indian economy..

• Gold bounce back once more with a hammer last week from the previous week  dip after dollar strengthened and attempting to get back into support zone from where it had slipped last week which has resistance now.

• Indices corrected last week 3-4% and at a support zone but the momentum and trend on short term has slipped to sideways

• The bias now turned moderate bearish as not much of correction may have happened since long and also since candlestick and lost momentum leads to it.

• However there scope for a bounce cannot be ruled out as there still is a divergence on nifty and price is at a support zone.

• India vix has shot up 12% to near 19 levels and then reverted to near 17 levels losing 9% and could be forming new volatility range now that traders which option buyers would now have to adjust themselves to this choppiness but options sellers would be having enough premium at this level.

• Ratio spreads could be something to look for at this volatility levels.Double diagonal also could be applied tp benefit from the vega.Using Vertical Spreads in options are likely to give more probable wins as compared to naked long/short  positions during these level where it is decisive of a bounce or a down move .Positional long trades need be alert on when the support levels as indicated earlier are taken away or when to trail as and when resistances are taken away.