IGI Logo

Formation of lower high-low signifies corrective bias…

Technical Outlook

• The index witnessed a roller coaster move, as index witnessed more than 2300 points intra-week movement. As a result, weekly price action formed a bear candle carrying shadows on either side, indicating extended correction amid elevated volatility. In the process, Nifty managed to hold last week’s panic low of 16200 on a closing basis

• The bias remains negative as the index continues to form a lower high-low led by anxiety around geo political events leading spike in crude oil prices, outcome of UP election and US Fed policy. With today’s session gap down opening index is likely to open below 52 weeks EMA, indicating extended correction. Going ahead, a decisive close below key support threshold of 15800 would lead to extended correction towards 15400 as it is confluence of :

• A) 61.8% retracement of CY-21 rally (13596-18604), at 15510 • B) over past two decade, the average correction post breach of 52 weeks EMA has been 5%, which will mature around 15400 • Meanwhile, on the upside immediate resistance is placed at last week’s high of 16500.

• Amidst elevated volatility IT, metal to relative outperform, upstream oil companies would remain in focus

• The Nifty midcap and small cap indices are hovering in the vicinity of key long term average of 52 weeks EMA. We expect broader market would relatively underperform the benchmark in coming weeks

In the coming session, index is likely to witness gap down opening tracking escalating geopolitical issues. The formation of lower highlow signifies corrective bias. Thus any pullback towards 16030-16070 should be used to create short position for target of 15951

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 34408

• The weekly price action formed a bear candle with a lower high -low indicating continuation of the corrective decline . The index need to start forming higher high -low in the daily chart on a sustained basis for any technical pullback to materialise in the coming week, Failure to do so will keep the immediate bias to corrective

• The index in today’s session opening gap down amid week global cues and further rise in crude oil prices . It is opening below last two quarter lows and December lows of 34000 signalling continuation of the corrective bias and extension of decline towards support area of 32800 -32600

• On the higher side the index has resistance at 35800 levels, being the last Wednesday gap down area

• The index has major support around 32800 -32600 levels being the confluence of the following :

• (a) 80 % retracement of the previous major up move of April -October 2021 (30406 -41829 ) placed at 32700 levels

• (b) previous major breakout area of February 2021 is also placed around 32600 levels

• Among the oscillators the weekly stochastic remain in downtrend and is currently approaching oversold territory with a reading of 23

. In the coming session, index is likely to open gap down amid weak global cues and sharp rise in crude oil prices . Volatility is likely to remain high on account of the volatile global cues . Intraday bias remain down below 34000 levels, hence after a negative opening use intraday pullback towards 33850 -33910 for creating short position for target of 33580 , maintain a stop loss at 34030

Nifty Bank Index – Weekly Candlestick Chart

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer