India VIX fell by 3.35 percent to 12.33 levels and overall lower volatility suggests that bulls could support the market on declines.
The Nifty 50 snapped four-day winning streak and closed rangebound session on a weak note Friday, forming an indecisive pattern known as 'Doji' on the daily candlestick charts, which also resembles 'Spinning Top' kind of pattern. On the weekly scale, the index formed bullish candle.
A 'Doji' is formed when the index opens and then closes approximately around the same level but remains volatile throughout the day which is indicated by its long shadow on either side. It appears like a cross or a plus sign.
Spinning Top is often regarded as a neutral pattern which suggests indecisiveness on the part of both bulls as well as bears. It can be formed in an uptrend as well as in a downtrend.
The Nifty 50 after opening lower at 11,566.60 managed to claw back immediately to hit an intraday high of 11,604.60, but wiped out gains in the first hour of trade itself to hit day's low of 11,532 and remained range bound for rest of the session. The index closed 25.70 points lower at 11,557.10 while it rallied 0.75 percent during the week.
Albeit Nifty 50 registered a Doji kind of indecisive formation enough sell signals emerged on lower time frame charts, post Friday’s price action, suggesting that the said index may be on the verge of a short term trend reversal.
Hence, selling shall get accelerated if it breaches the 39-day old ascending channel, whose support is placed around 11,532, which is in progress from the lows of 10,550 levels. A decisive breakdown below the said channel shall open up a new target placed around 11,350 levels.
In next trading session a close below 11,498 levels shall confirm the short term down trend there by intensifying the selling pressure further which shall eventually lead to the test of 11,340 levels.
Contrary to this a close above 11,620 shall reinstate the bullish sentiment with initial targets placed around 11,700 levels.It looks prudent on the part of traders to book profits and remain on sidelines till further signs of strength are seen in the markets.
India VIX fell by 3.35 percent to 12.33 levels and overall lower volatility suggests that bulls could support the market on declines.
On the option front, maximum Put OI is moved back 11,000 followed by 11,500 strike while maximum Call OI is at 11,600 then 11,500 strike. Put unwinding was seen at most of the immediate strike price while Call writing was seen at 11,600, 11,650 and 11,750 strikes.
The Nifty has negated its formation of higher highs - higher lows of last four sessions and formed a small Bodied indecisive candle on daily scale however weekly scale still holds its overall bullish setup. It failed to surpass 11,600 zones and witnessed a profit booking-led decline towards 11,532 marks.
He believes overall trend is still intact to positive to rangebound as it has been trading in a rising channel with the support of rising trend line.
Now it has to continue to hold above 11,550 zones to witness an upmove towards 11,635 then 11,666 while on the downside immediate major support is seen at 11,500-11,450 zones.
Bank Nifty remained under pressure for third consecutive trading session and has been underperforming the Nifty index. It has recently failed to surpass its multiple hurdle of 28,333 zones and fell towards 27,782 marks.
"The index formed a Dark Cloud cover on weekly and an early formation of Double top on daily scale which suggests that some more profit booking could be seen if it doesn't surpass immediate hurdle of 28,000 zones.
Now if it sustains below 28,128 zones then more profit booking could be seen towards 27,650 then 27,440 zones.
MORE WILL UPDATE SOON!!
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