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.

Bulls continues to be here : Weekend Market Analysis : June 7 2021

                                                             

• Nifty hit new all time high last Monday and then retraced couple of days but to again move even higher to make another all time high at 15734.Banknifty price action was similar but has resistance ahead before breaking all time high of February.

• The last candle on nifty is small body red candle similar to a spinning top on the top of a rally which normally is bearish but may be ruled out after the current long consolidation and breakout rally it has just begun.

• Immediate support levels are below at earlier resistance zones from where is broke out ie 15430-15330 levels and below that near 150000 levels and then50/100  moving average levels near  14800.

• A 15900 could be targeted as per FIB projections for nifty.

• Bank nifty has supports at 34300 levels and resistance are at 36500 and 37700 levels.

• Bank nifty closed with a bearish red candle after a momentum divergence on daily timeframe worked out on Friday and met the target levels.

• Nifty momentum is intact on bullish zones on all timeframes of short/medium/long term.

• Bank nifty currently has a 5 bar bullish positive reverse divergence that could take it to 35800 levels.

• Also make note that on long term monthly timeframe it has a bearish divergence that could cause correction to 30K levels if it works out along with the 100 day moving average continuing above 50 dma on daily timeframe.

• Trend indicators are strong bullish on all timeframes of nifty and trend continues to be rising and bullish for bank nifty as well.

• Nifty and Bank nifty futures data shows short build up on Friday. Nifty options open interest data shows highest resistance at 15700 followed by 16000 and 15800 levels and supports are at 15500 for the 10th June expiry.

• Bank nifty has highest call writing at 35500 followed by 36000 and 36500 levels while supports are at 34500.

• The put call ratio of nifty has dipped to 0.99 which is not very bullish while bank nifty has PCR of 0.65 indicating bearishness for the expiry.

• FII were buying last most  days of last week with good volumes is good news while DII did large selling on last day of week.

• India VIX fall 6.8% last and settled at 15.94 on Friday which is in favor of further up move.

• Implied volatility is above Historical volatility but IV percentile is lowest in recent times of 0.4 in favor of option buyers.

• Sectors of IT,Energy,Metals,Auto,Infra,Services,Midcaps are all in bullish zones.

• US market are rising after a correction and heading to bullish zones.US Dollar index has maintains 90 levels while USDINR pair also taking support at 73 levels. Gold continue to be bullish.

• To wrap up we could see that markets are in a bull run with  5 weeks of higher high and could continue doing same although it may not be doing it slowly that would mean interim corrections after making every new highs.

• So trend is clear and buy on dips is the way to go and with the volatility at lower levels directional trades using option spreads could work out well. Intraday can be played based on price action support resistance levels on options.

Simple candlestick patterns/ trend-lines work well on smaller intraday timelines too.Check yourself in the chart how a W ,rectangle pattern and trend-lines.