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NIFTY IT: 29894 weekly change (1.68%)

Observation

* On the monthly time frame the NIFTY IT index has been forming a higher high higher low patter since June 2020. 

* On the weekly time frame we can see the prices forming a higher high higher low pattern after breaking out of a ‘Symmetrical Triangle’ pattern.

* On the weekly chart we have shown the Bollinger bands, wherein we can see that the prices riding the upper Bollinger bands since the past couple of weeks.

* On the indicator front the RSI plotted on the weekly chart can be seen placed above the 50 mark since June 2020, currently it can be seen moving higher, pointing towards the presence of bullish momentum in the prices. The MACD plotted on the weekly time frame can be seen placed above the zero line, indicating the presence of bullishness in the trend. The MACD histogram can be seen moving higher, indicating increasing bullish momentum in the trend.

* On the upside 30400 (38.2% extension level of the rise from 10991-27176.50 projected from 24212) will act as a resistance level above which we can expect the 32305 (50% extension level of the rise from 10991-27176.50 projected from 24212).

* The 3 week low of 28380 will act as a red flag level, if the prices breach below this level we might see the prices move lower towards the 27135 (20 Week SMA).

Inference & Expectations

* From the long term perspective, the NIFTY IT seems to be in a strong bullish phase.

* The price action on short and the medium term charts suggests that the prices have given a break out of a consolidation, and is currently showing signs of outperforming the NIFTY.

* The primary trend of the NIFTY IT index remains to be strongly bullish, from a medium term perspective. We can expect the prices to move higher towards the 30400 mark immediately. If this level breaches we feel the prices to move higher towards 35305 levels.

* Our Bullish view will be negated if the prices breaks below 28380 mark. After that we may see further down move towards 27135 levels.

NIFTY Auto: 10201.35 weekly change (-2.18%)

Observation

* On the monthly time frame we can see that the NIFTY AUTO index has been moving in a broader range of 9200 - 11090 since past few months.

* On the weekly chart we can see that the index has formed ‘Double Top’ pattern near 10900 mark and with that it has been forming a lower top lower bottom pattern since the past 3 weeks. Currently it has placed just below the 20 Week SMA which shows some negative sentiments for the short to medium term.

* On the daily chart, the sector has been sustaining below its 100 Day SMA since last 3 days which confirms the bearish undertone of the sector for the short term. 

* On the indicator front, the RSI plotted on the weekly time frame is placed near 52 marks but it has been moving downwards since last few weeks with the formation of lower top lower bottom pattern, indicating increasing bearish momentum in the prices.

* Going ahead 9980 (multiple touch point level) can be expected to act as a key support level, If the prices breach below this level we can expect further downside towards 9525– 9345 (23.6% retracement level of the rise from 4452– 11093 and swing low).

* The 2 week high of 10531 will act as a key resistance level going ahead. If the prices breach above this level, we can expect the prices to move higher and test the 10900 (Multiple touch point level).

Inference & Expectations

* NIFTY AUTO on the monthly time frame seems to have halted it up move since the past few of months and has been moving sideways.

* In the week that passed by the index moved lower and tested a fresh multi week low.

* The price action of the past few weeks suggests that the index might witness further down move if the prices breach below the previous week low of 10175. 

* If the prices breach below the 10175 mark we can expect the prices to move lower towards 9980 immediately followed by 9523 -9345 eventually.

* The above analysis will not hold true if the prices breaches above the 2 week high of 10531 levels, beyond which we can expect the prices to move higher towards the 10900 mark.

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