NIFTY-Weekly Views- Bears back with black belt

Nifty saw a steep fall thereby making the decline for the third consecutive week. The weekly candle formation is a strongly bearish one. Being a Technical sell-off the momentum was higher and the reversal if it happens also could be sharper if short covering happens. Nifty is still showing signs of weakness ahead of the year end.

A few observations from the weekly charts are:
Weekly charts suggest that

• The index moved around 462 points viz. between 17779 and 18473
  the oscillators are showing negative bias
  Option OI is expected to drive the market direction
  The Index made lower highs and lower lows and it ended up with a bearish candle
  

Expected scenarios for the ensuing week

*Though closed at 17806, the Index is expected to open higher
As expected the Index moved lower towards the major support at 17860 and with the momentum it breached this support extended the loss to 17779
The final hope lies at 177770 and further breach could lead to weakness towards 17400
Further the weekly closing is near the lows which is supportive of the negative bias.
Going forward the 18250-18420 zone, though far-off for now, is likely to be a major barrier
For the ensuing week, the index may find supports at 17770, 17660, 17540 and the index could face resistances at 17960, 18080, 18180 and 18270

Additional interesting observations

*In spite of the sharp fall the FIIs and DIIs seem to be net positive (possibly fresh position Building)
Two possible scenarios
Expected range of 17560-18150 or 17770-18360
Any close outside the range of 17560-18360 requires re-assessment of risk

Final Note

*A new Gap has been created viz. 18127-17977. There may be an attempt to fill this gap at a time when reversal happens. In this down move we have seen a Gaps (18272-18088 & 18909-17786) which were created during the up move got filled
It so happens that when a long term trend line is breached and the prices reach a new peak, there would be profit booking which brings down the price as close to the break-out levels. We are currently in this scenario and we as expected the move dragged the NIFTY well past expected 17960
The lows of 17779 match with the Fib projection of third wave of the down move starting from 18887 to 18415 and then up move to 18700
If we take the Fib retracements so far the correction has been 1108 points. The Annual gain has been 3704 points from 15183 to 18887. One third correction would fall at 17666 and a 50% correction would mean 17035
Index at 18800, the markets were looking for 19500 and at 17800 markets may talk about 16500
We are in to a tuff situation and the sentiments are negative. Till we see a daily close above 18170 there would be selling pressure on every spike and there exists a risk of deeper correction towards 16500 if weekly close is below 17500
This week will be crucial to see whether we finally end up in a bear cycle towards 16500
There are higher possibilities of churning of portfolio

Seasons Greetings and Best wishes for a Happy New Year 2023

Disclaimer: The views expressed here are personal and not connected to SYFX Treasury Foundation. The views are for learning and reference purpose only.