Correction or Consolidation? : Weekly Technical Analysis : July 12 2021

 

• Weekly bearish spinning top candle on Nifty & gravestone Doji candle Bank Nifty.

• Nifty & Bank nifty shows a inverted V shape  ie moving up and then reversing last week on daily.

• Nifty& Bank nifty reversed from previous resistance zone.

• Nifty at a major previous swing low support zone and both indices at channel bottom.

• Latest nifty daily candle Doji-shows indecisiveness, 

• Bank nifty has a hammer  candle pattern on daily potential reversal up.

• Nifty & Bank nifty both has Bollinger band squeeze into narrow range and showing clear volatility contraction /consolidation.

• Nifty once again failed to conquer previous resistances tested tested multiple times of 15900 near an all  time high and rounding number psychological level of 16000 close by.

• It immediate support at  15600 and then 15500 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/35800/37700/36500 and has 34000-34500 levels as next supports below.

• Nifty RSI momentum has fallen further down and remain in sideways zone on  daily. However medium to long term momentum is intact in bullish area,

• Nifty daily both  bullish positive reverse divergences failed.

• Bank Nifty momentum daily continues to be in sideways zone and falling  .Weekly and monthly momentum  maintains to be in bullish zones.

• Nifty ADX trend indicator continue in  bearish areas on daily timeframe with flat strength while weekly and monthly trend remain bullish with flat strength 

• Bank nifty has ADX trend indicator crossed over back to bearish  zones  on daily timeframe. The trend continue to be in bullish side on medium & long term timeframes with flat strength.

• 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 16000 with 15800/15700 also seen having more writing while 15600  levels shows highest  support point for nifty with 15500/15000 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 0.66  which is not bullish while 0.74  for bank-nifty also is not bullish.

• India VIX  fall near 20%  to historic lowest levels of 11.1 and settled at 12/9 last week.

• The Nifty IV 12.8 is above HIV 7.4  and  IVP remaining 3.1  levels which is at the new low volatility regime. 

• IT sector corrected near 3% but continue with bullish divergence seen weekly with strength in momentum and trend on short/medium/long term charts. 

• FMCG also corrected 1% but continue bullish with momentum bullish divergence seen weekly and could regain momentum to move further up slightly dipped on short term momentum as of now.

• Metal did ok last week but still sideways on short term but medium to long term is bullish and so need wait till momentum pickup and breakout. Currently consolidating.

• Auto sector corrected 4% and lost momentum it gained last week and now is sideways in short / medium term and bullish only on long term.

• Pharma correct 2.5% last week and slipped back to sideways on daily but higher time frames are bullish and could breakout as discussed previous weeks

• Last week FII sold> 2000 crore in cash.

• DII also turned sellers last week after 14 days continuously in cash and sold all bought last week.

• The net longs on derivatives of FII/DII had dipped.

• US markets ended green last week and show hammer pattern on weekly indicating further up move.

• Dollar Index at resistance inverse happen up 92.1 level.

•  USD-INR currency pair at resistance near channel top a Doji on weekly but bullish divergence on weekly.

• Gold continue bullishness and at channel top but with slow momentum and any further moves could make it bullish.

• India VIX has fallen to lowest 12.9 levels and seems to remain at these at least for next week where iron condor weekly may be applied with view that 15900 remain resistance and 15500 may not break for now.

• Therefore Nifty calendar spreads hedged is not bad idea for coming week.

• Markets narrow range bound and at neckline support zone with uncertainty as to how long it could consolidate here and which side it would break down. Therefore trade with caution.

• 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.

• Momentum  is sideways and Trend is bearish for short term on both indices and bias is negative.

• 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.

Narrow Range Market :Weekly Market Analysis : July 5 2021

 

• False breakout weekly bearish candle on both Nifty & Bank Nifty.

• Nifty & Bank nifty shows a trending down move entire week on 1 hr charts and given up 20 day moving average support.

• Nifty weekly bearish candle open=high pattern.June month shows a spinning top small body.

• Nifty & Bank nifty seen taken support at previous swing lows.

• Latest nifty daily candle hammer-could be slightly bullish, 

• Bank nifty has a spinning top  candle pattern on daily and June month also has a bearish candle.

• Nifty & Bank nifty both has Bollinger band squeeze into narrow range and showing clear volatility contraction /consolidation.

• Nifty at major resistance confluence of previous resistances tested 5 times and near an all  time high 15915 and rounding number psychological level of 16000 close by.

• It immediate support at  15600 and then 15500 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 37700/36500/35800/35300 and currently take  support near 34600-34800 levels and has 34000 as next support below

• Nifty RSI momentum has fallen off from bullish into into sideways zone and seen falling on  daily.However medium to long term momentum is intact in bullish area,

• Nifty daily both  bullish positive reverse divergences failed.

• Bank Nifty momentum daily continues to be in sideways zone and bent up  .Weekly momentum also seems to be slipping into sideways while monthly momentum  maintains to be in bullish zones.

• The bearish monthly momentum divergence seems to have worked out and pulled down bank nifty in June.

• Nifty ADX trend indicator continue in  bearish areas on daily timeframe with flat strength while weekly and monthly trend remain bullish with flat strength.

• Bank nifty has ADX trend indicator last week crossed over back to bearish  zones  on daily timeframe. The trend continue to be in bullish side on medium & long term timeframes with flat strength.

• Open interest data for Nifty and Bank nifty showing a short covering based on the futures contracts which is bullish.

• Highest options call writing for 08 July expiry is seen at 16000 with 15800 also seen having more writing while 15700  levels shows highest  support point for nifty with 15600/15500 support is close by.

• Bank-nifty options open interest data shows highest call writing at 35000 levels while highest put writing seen at 34500  levels that could act as support for the expiry

• Put call ratio for nifty accordingly is seen 0.8  which is not bullish while 0.79  for bank-nifty also is not bullish enough.

• India VIX  fall to historic lowest levels of 12.1 which is more than 10% fall further.

• The IV is above HIV 11.5 and  IVP remaining 0.4  levels which is at the new low volatility regime. 

• IT sector is bullish with strength in momentum and trend on short/medium/long term charts. All time high ending with doji

• FMCG is bullish with momentum bullish divergence seen and could regain momentum to move further up.

• Metal is sideways on short term and need wait till momentum pickup.

• Auto sector weekly momentum range shifted and could move up in short term and need wait or some more momentum catchup.

• Pharma has now turned bullish last will with breakout as discussed previous week

• Last week FII sold>  5000 cr in cash did almost no buying net June month.

• Thanks to DII who bought all of last 12 day continuously in cash and June month had buying > 7000 cr that helps market form not crashing.

• The net longs on derivatives of FII/DII had dipped.

• US markets are bullish 

• Dollar Index rising up 92 level.

•  USD-INR currency pair broke out of at resistance zone and hit 75 levels but daily gravestone Doji show bearish pressure as well.

• Gold showing a hammer weekly candle and last week seen to be moving up from the support zone and probably good time to invest in for medium term.

• India VIX has fallen to lowest 12 levels and it could mean revert and therefore vega positive option strategies like calendar spread would be applied to benefit on it. 

• Therefore Nifty calendar spreads hedged is not bad idea for coming week.

• Markets at a narrow range bound phase and there is uncertainty as to how long it could consolidate here and also which side it would break down.Therefore trade with caution.

• India vix are at difficult low volatile levels for option traders both buyers and sellers and non directional trades are only to be thought.

• Momentum  is sideways and Trend is bearish for short term on both indices and bias is negative.

• 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.

GOLD CUP AND HANDLE POSSIBLE BREAKOUT : INVESTMENT WATCHLIST

 

1. GOLD seems to be forming a cup and hand pattern on monthly charts. 
2. Currently resisting at the trendline channel on weekly and a short to medium term breakout can be expected.
3. Keep the charts on your watch out and a right entry could easily be found and on confirmation entry can be made for investment.
4. Wide range of investment and trading options exit for gold like Gold ETF(exchange traded funds),mutual funds, commodity futures, gold bonds like Sovereign Gold funds, gold coins etc.
5. GoldBees for example is liquid enough for short term trading also while long terms benefits from highly safe options like RBI issues bonds are highly. suitable for the long term investment.
6. Gold is a hedge to inflation and therefore is essential part of every investors portfolio in the long term and ideally allocation recommended by experts are half % of once age.