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.