Weekly Technical Outlook - The NIFTY PHARMA index has been forming a higher high higher low patter since April 2020 By GEPL Capital
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NIFTY PHARMA: 14635.05 weekly change (1.91%)
Observation
* On the monthly time frame the NIFTY PHARMA index has been forming a higher high higher low patter since April 2020.
* On the weekly time frame we can see the prices resuming its up move after breaking out of 5 week consolidation. This up move came in after the prices found support near the 13800 mark.
* We witnessed, the shallow retracement at every time and also the sector formed Change in Polarity formation (previous resistance has now become support) @ 14240 mark on the daily charts which shows strong positive sentiments of the sector for the short to medium term.
* On the indicator front the RSI plotted on the weekly chart can be seen placed above the 50 mark since April 2021, currently it can be seen moving higher, pointing towards the presence of bullish momentum in the prices. The ADX line plotted on the weekly time frame is placed above the 25 mark and is moving higher indicating presence of strength in the uptrend.
* On the upside 14897 (50% extension level of the rise from 6242-13476 projected from 11280) will act as a resistance level above which we can expect the 15751 (61.8% extension level of the rise from 6242-13476 projected from 11280) and eventually towards 16966 (78.6% extension level of the rise from 6242-13476 projected from 11280).
* The 2 week low of 14230 will act as a red flag level, if the prices breach below this level we might see the prices move lower towards the 13438 (20 Week SMA).
Inference & Expectations
* From the long term perspective, the NIFTY PHARMA 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 PHARMA index remains to be strongly bullish, from a medium term perspective we can expect the prices to move higher towards the 14897 mark immediately. If this level is breached we can expect the prices to move higher towards 15751 and 16966 levels eventually.
* Our Bullish view will be negated if the prices breach below 14230 mark. If this level is breached we can expect further down move towards 13438 levels.
NIFTY REALTY: 397.55 weekly change (8.58%)
Observation
* On the monthly time frame the NIFTY REALTY had been in a consolidation range broadly between 130 - 385 levels since Jan 2011.
* In the last week, the prices finally gained momentum and has given a strong breakout of the 10 year consolidation phase and manages to sustain above the major resistance of 385 mark which shows strong positive sentiments of the sector for the short to medium term.
* We have seen that a strong breakout of a ‘Cup & Handle’ pattern on the daily charts which indicates the positive undertone of the sector.
* On the indicator front the RSI plotted on the weekly time frame can be seen placed above the 50 mark since September 2020 and is currently forming higher high higher low pattern as the prices move towards the fresh life time highs, indicating the presence of strong bullish momentum in the trend. The MACD plotted on the weekly time fame can be seen placed above the zero line and have been forming a bullish crossover, confirming positive momentum of the sector for the medium term.
* Going ahead the we can expect the index to test the 425 (78.6% extension level of the rise from 203-365 projected from 298), if this level is breached we can expect the prices to move higher towards 460 (100% extension level of the rise from 203-365 projected from 298).
* The Key support level to watch out for on the downside will be 366 (weekly low and the breakout level). If this level is breached we can expect the prices to move lower towards 337 (20 Week SMA).
Inference & Expectations
* NIFTY REALTY index had been in a consolidation phase for about 10 years now.
* In the week that passed by the index moved above the resistance level of the 10 year consolidation.
* The price action of the past few weeks suggests that the index is showing strong positive strength for the short to medium term.
* We expect the bullish momentum to take the prices higher towards the 425 mark immediately. If the prices move above the 425 mark, we can expect the prices to move higher and test the 460 mark.
* On the down side the red flag level to watch out for will be the week low of 366. if the price breach below this level we can expect the prices to move lower towards 337 levels.
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