NIfty in the previous week formed another doji candle with further range compression. This follows continued inside candles that it has been forming for last 3-4 weeks indicating a lot of indecision in the market. It encountered resistance from the upper trendline and is now resting on 38.2% retracement of the current rally.
The Option chain indicates huge call writing at 18100 and 18200 which indicates huge resistance. 18100 PE has not gone away completely and there is not a lot of writing that happened on 18000 or even 17900 PE making the bearish scenario more possible. FIIs on the other hand have bought both Puts of 62k and Calls of around 71k. Although overall outstanding OI of FII has calls of 1.45 L and Puts of 3.08 L indicating bearishness.
Two probable scenarios for this week: -
1. Bullish case - Nifty is currently in a HH and HL trend and is currently seeking support at the psychological number 18k and also the previous Swing High. Global cues have turned positive with US markets staging a rally on Friday. So Mon open might be positive. Nifty is also at the 38.2% retracement of current trend of Low of 17774 and High of 18183. For Nifty to continue its bullish momentum it needs to break the downward sloping trendline and move decisively above 18100 which would indicate that the bullish rally is about to begin.
2. Bearish case: - Nifty could not cross the downward sloping trendline and has fallen by making a large red candle on 1h/4h chart and currently taking support at previous swing high. It has broken below EMA 20 and EMA 50 and has also closed below SMA 20 on the Daily TF. Two possible ways it can continue its further downmove is either it breaks 18k tomorrow in the morning (unlikely) and then takes support at 1730-17950 region and tries to retest 18k again and then goes and breaks the 17930 region which will confirm the LL and LH case. It is plausible because of the global cues that it opens positive tomorrow but encounters resistance at 18060-18100 region and then breaks 18k. This would again confirm the LH and LL pattern and it could move towards 17860 or 17770 tomorrow.
Happy Trading and Best of Luck!!
Disclaimer - This is not trade recommendation or advice. This is purely for educational purposes. Do your own research before entering into a trade.
The Option chain indicates huge call writing at 18100 and 18200 which indicates huge resistance. 18100 PE has not gone away completely and there is not a lot of writing that happened on 18000 or even 17900 PE making the bearish scenario more possible. FIIs on the other hand have bought both Puts of 62k and Calls of around 71k. Although overall outstanding OI of FII has calls of 1.45 L and Puts of 3.08 L indicating bearishness.
Two probable scenarios for this week: -
1. Bullish case - Nifty is currently in a HH and HL trend and is currently seeking support at the psychological number 18k and also the previous Swing High. Global cues have turned positive with US markets staging a rally on Friday. So Mon open might be positive. Nifty is also at the 38.2% retracement of current trend of Low of 17774 and High of 18183. For Nifty to continue its bullish momentum it needs to break the downward sloping trendline and move decisively above 18100 which would indicate that the bullish rally is about to begin.
2. Bearish case: - Nifty could not cross the downward sloping trendline and has fallen by making a large red candle on 1h/4h chart and currently taking support at previous swing high. It has broken below EMA 20 and EMA 50 and has also closed below SMA 20 on the Daily TF. Two possible ways it can continue its further downmove is either it breaks 18k tomorrow in the morning (unlikely) and then takes support at 1730-17950 region and tries to retest 18k again and then goes and breaks the 17930 region which will confirm the LL and LH case. It is plausible because of the global cues that it opens positive tomorrow but encounters resistance at 18060-18100 region and then breaks 18k. This would again confirm the LH and LL pattern and it could move towards 17860 or 17770 tomorrow.
Happy Trading and Best of Luck!!
Disclaimer - This is not trade recommendation or advice. This is purely for educational purposes. Do your own research before entering into a trade.