Price Action Analysis:
Nifty recorded an all-time high at 12431 in the month of January 2020. From the all-time high price declined and recorded a new low at 7511. From the low of 7511 price retraced in three leg up move with a swing high at 9889, swing low at 8806 and to finally close at 11073.
The question in the mind of most traders is that, will this up move continue further or will we see a change in price direction? In order to understand the true nature of price let’s analyze the foot prints of price. On a monthly time frame, price formed an Inside Bar in the month of April. With an Inside Bar in place, the price bar of March is considered as the Mother Bar with a high at 11433 and low of 7511. In the month of July, price recorded a high at 11342 and closed at 11073. Even though price recorded a new high in the current month, the monthly close is below the January quarter range resistance (11201) and the March quarter resistance (11178). Price rise in the current month is on low volumes compared to the previous month volume. The first sign of further up move will be only when price manages to break above the monthly high at 11342. The confirmation for the continuation of up move will be only when price breaks and closes above the mother bar high at 11433. With a monthly and weekly close falling in line price formed a weekly Bearish SKR price bar. (For further detailed insights you will have to wait for the weekly technical outlook which will be published by 02.08.2020)
The current month volatility of Nifty is at 10.7 and the annual volatility at 37.3.The probable monthly returns is of 1193 points from the monthly close, with a measured move in increments of 260 points.
Stock Market Seasonality
Seasons are caused by the fact that the Earth is tilted on its axis by 23.5°. With seasons we have Equinox and Solstice. A solstice is the point during the Earth's orbit around the sun at which the sun is at its greatest distance from the equator, while during an equinox, it's at the closest distance from the equator.
The summer solstice occurred in June and the autumnal equinox is due in the month of September. With the end of summer solstice we derive the semiannual seasonality levels. The price levels of 10531 acts as the semiannual seasonality level for Nifty. The semiannual seasonality levels coincides with the monthly minor support. Price action near the zone of semiannual seasonality will be of utmost importance in determining the future direction of price which will be valid till the end of next winter solstice.
Trade Plan
The point of control of Nifty Spot for the month of August is in the zone of 11821. Currently price is hovering around the minor resistance zone at 11081. Price slipping below the minor resistance zone and witnessing a valid break can move towards the point of control at 10821. Price staying above the minor resistance zone can move towards the major resistance zone at 11342. Price surpassing the major resistance can move towards the zone of 11602 and 11863.
Price breaking point of control at 10821 can find minor support in the zone of 10561 and major support in the zone of 10299. Price breaking below the major support can move lower towards the zone of 10039 and 9778.
Disclaimer
All trade ideas published are for educational purpose only. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
Nifty recorded an all-time high at 12431 in the month of January 2020. From the all-time high price declined and recorded a new low at 7511. From the low of 7511 price retraced in three leg up move with a swing high at 9889, swing low at 8806 and to finally close at 11073.
The question in the mind of most traders is that, will this up move continue further or will we see a change in price direction? In order to understand the true nature of price let’s analyze the foot prints of price. On a monthly time frame, price formed an Inside Bar in the month of April. With an Inside Bar in place, the price bar of March is considered as the Mother Bar with a high at 11433 and low of 7511. In the month of July, price recorded a high at 11342 and closed at 11073. Even though price recorded a new high in the current month, the monthly close is below the January quarter range resistance (11201) and the March quarter resistance (11178). Price rise in the current month is on low volumes compared to the previous month volume. The first sign of further up move will be only when price manages to break above the monthly high at 11342. The confirmation for the continuation of up move will be only when price breaks and closes above the mother bar high at 11433. With a monthly and weekly close falling in line price formed a weekly Bearish SKR price bar. (For further detailed insights you will have to wait for the weekly technical outlook which will be published by 02.08.2020)
The current month volatility of Nifty is at 10.7 and the annual volatility at 37.3.The probable monthly returns is of 1193 points from the monthly close, with a measured move in increments of 260 points.
Stock Market Seasonality
Seasons are caused by the fact that the Earth is tilted on its axis by 23.5°. With seasons we have Equinox and Solstice. A solstice is the point during the Earth's orbit around the sun at which the sun is at its greatest distance from the equator, while during an equinox, it's at the closest distance from the equator.
The summer solstice occurred in June and the autumnal equinox is due in the month of September. With the end of summer solstice we derive the semiannual seasonality levels. The price levels of 10531 acts as the semiannual seasonality level for Nifty. The semiannual seasonality levels coincides with the monthly minor support. Price action near the zone of semiannual seasonality will be of utmost importance in determining the future direction of price which will be valid till the end of next winter solstice.
Trade Plan
The point of control of Nifty Spot for the month of August is in the zone of 11821. Currently price is hovering around the minor resistance zone at 11081. Price slipping below the minor resistance zone and witnessing a valid break can move towards the point of control at 10821. Price staying above the minor resistance zone can move towards the major resistance zone at 11342. Price surpassing the major resistance can move towards the zone of 11602 and 11863.
Price breaking point of control at 10821 can find minor support in the zone of 10561 and major support in the zone of 10299. Price breaking below the major support can move lower towards the zone of 10039 and 9778.
Disclaimer
All trade ideas published are for educational purpose only. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
