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Below the Quote on Technical Analysis for forthcoming week starting September 30 by Shrey Jain, Founder & CEO SAS Online - a deep discount broker

Nifty holds 26000 and meets the confluence zone of 26200 but after such an extended move what can be the strategy to follow? Can we remain super bullish as reward to risk is now stretched or a sensible dip can flush out weaker money to bring in momentum.

Nifty has formed a three white soldiers on the weekly chart which indicates a fresh momentum from the levels of 25500 levels but after a prolonged stretch in the index Nifty formed a small red candlestick on Daily chart ending the week on a muted note. Index moved from contraction to expansion and a weaker close on Friday indicates a minor profit booking or sideways consolidation is on the cards.

The Momentum – RSI is well placed at 89.94 RSI can remain divergent in bullish market but at present it indicates an overbought market with bearish divergence when compared to its previous peaks.

The Trend Velocity as Indicated by ADX is strong given ADX has been above 25 and positive on rolling basis. We haven’t seen so strong readings on trend strength since Jan 2024 when Nifty 50 moved from 19k to 22K.

ATR – The measure of price trend vol is contracting as indicated by Dual ATR and if we see dual ATR diverge prices may expand.

Below is the chart for the same.

The Initial support for Index is at 26040 and below that 25900 while on upside as indicated by Fibonacci extension and the upside is open towards 1.272 level at 26541 and 1.414 level at 26741 and it coincides with the channel Nifty has been forming since May 2024. The strategy remains buy on dips but we advise to utilize the supports mentioned.  As per OI Data, Nifty can be well within the range of 26500 – 26600 to 26100 in coming week as well with upside bias.

BankNifty Futures on the other hand continues to trade on record premiums for October series while the closing is below the support trendline drawn from lows of 50500 in September first week. The Weekly Spot chart formed a gravestone Doji indicating a word of caution on the upside while Futures chart has formed a shooting star pattern. Now this indicates we have to be cautious and wait for confirmation of BankNiftyFut to cross above 54500 or utilize the dips as the most logical conclusion.

The ADX has just seen a fresh velocity above 25 after almost 9 months while RSI above 70 with a fresh peak indicates good momentum.

As point of polarity, BankNifty future has support at 53900 and below that 53500. One should utilize the dips and with truncated week ahead and expiry a day before, Volatility needs to be kept in check.  In Short term we expect bounce from supports while midterm target for BankNifty remains intact at 56000 – 56100.

Below is the chart of BankNifty Future.

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