IGI Logo

Below the Quote on Weekly Technical Outlook by Lovelesh Sharma, Consultant, SAS Online – a deep discount broker

Nifty

Nifty tested both 20 and 50 SMA last week as it whipsawed the short sellers and possibly creating a trap to close at the same level as last week while the overall breadth remained strong in broader market. BankNifty as well similarly expanded the price action with a range of more than 1200 pts within a day and closed at the same level.

It was a whipsawed Friday as we witnessed range expansion in both Nifty and BankNifty while they retraced all early morning losses to close at higher end of the range. Nifty managed to test and close above its 20 MA while at the same time BankNifty as well but there is appositive 20 and 50 MA crossover.

The overall breadth for Nifty seems to be intact with almost 80% stocks sustaining the 20 MA while 65% of NSE universe is above 50 and 200 SMA. This is a positive development specifically despite a volatile Friday, on weekly basis breadth remains intact.  The net new highs to net new lows have risen for third consecutive week after a small flip of one week. Though, due to sideways price action in last one week the daily reading is muted.

The bar pattern suggestsa inside day as we see current week price action well within the previous week range but at the same time Momentum on the daily scale remains positive with RSI reading above 70. This is a good development as a thrust in the market internal can make the move in momentum further on higher side. ADX as well is at 20 indicating the velocity is still intact in upward trend.

On the downside Nifty has strong support at 24500 which is what bulls need to defend to tread in higher highs and higher lows as we move into festive season across global markets. With lower liquidity, we may expect price and levels to be very important on domestic front. Support for Nifty is at 24500 which if taken out we expect 24250 to be next important support. Since we are in uptrend a buy on dips strategy should work well with upside open to 25290. A minor resistance at 249450 – 25000 needs to be taken out.

BankNifty

BankNifty on the other hand had similar price action as on Friday the range expanded to 1200 pts engulfing entire week range but on weekly scale, we are well within the previous week’s range, hence an inside day formation. At the same time, the key resistance for BankNifty is at 53900 – 54000. This is the zone that needs to be taken out for further upside to 55500 – 56000. The support for BankNifty in short term is placed at 52660, given the Friday’s move, the range is a bit wide. Oon upside just a sustaining price action above 53950 – 54000 on intraday basis would propel BankNifty towards 54800 – 55000 in short-term. We suggest to have Buy on dips as a strategy for coming week since we closed at the higher end of entire week range, positive breadth and at the same time RSI on lower scale is above 50 while on Daily above 70, indicating upside momentum is visible.

Above views are of the author and not of the website kindly read disclaimer