NIFTY-Weekly Outlook-Venkat's Blog

Dec 10, 2023

The Index continued its bull run without any interruption. The big Gap up opening was indicative of the strong up move. In the process the Index made new ATH on 4 out of 5 days and hit a major mile stone of 21K. Major factors contributing to the change in sentiments are: the state election results, conflict zone returning to peacemaking efforts, stable oil price and economic data supporting a possible cap on Interest rates. The weekly candle still shows bullish nature of the move. As observed in the previous blogs, this appears to be a new intermediary trend emerging. For now, we can safely assume that the base has shifted higher to 20K.

A few observations from the weekly charts are:

• The index moved in a range of 499 points viz. between 20507 and 21006
  
• The oscillators of different time frames are turning positive
  
• Option open interest to drive the direction of the market
  

Expected scenarios for the ensuing week

• Index appear to have moved to the stage 2 of a new trend.
  
• Since the Index has posted a new ATH, there are no reference points on the upside. Only projected levels based on studies can be taken for references
  
• Additional interesting observations
  
• Bulls regained the full control upon break of 20260
  
• Index may find supports at 20850, 20650, 20500 the index could face resistances at 21140, 21310, 21470
  
• Though the earlier gaps got covered during the down move, and new gaps have been created around the same levels.
  
• 18972-19079 (29th July 23) Covered ** Created again as 18990-19129
  
• 19189-19246 (3rd July 23) Covered ** Created again as 19144-19247
  
• 19443-19651 (15th Nov 23)
  
• 19889-19976 (28th Nov 23)
  
• 20133-20194 (29th Nov 23)
  
• 20267-20601 04th Dec 23)
  
• Though there is no immediate risk seen, it is scary to see such huge gaps without consolidation. The return journey may also be harsh.
  

Final Note

• The Index has stayed well above the long-term trend line and the 200 DMA at 18883 and stays above 55 DMA at 19708
  
• Index has been continuously posting gains for the past 6 consecutive weeks
  
• Additional huge gap has been created during the beginning of the week
  
• The Index has breached the descending channel at 19570 and moved swiftly after this breach. The potential target for this would be about 900 points which is around 20470.
  
• Even if there is a reactive decline after 6 weekly gains, a few occasions in the past shows clear signs of a new trend emerging after such sharp gains (Refer june 22 & Mar 23)
  
• The Index is likely to consolidate between 20.5K and 21.5K
  
• This time the fault lines are at 20600 and 21140.
  
• Though the Index closed near the top of the range and the momentum still favours further gains, it is prudent to be cautious once we reach the target of 21400 zone.
  
• Observations favoring further upside
  
• Second consecutive strong 500 points bull candle with a closing near the highs. Thrid soldier waiting to emerge?
  
• Series of small double red candles in dailies seen before next spike higher
  
• These candles resembling snooze symbol, suggesting that there is nothing worthwhile for bears to risk and hence keep away
  
• No distinct reversal signal seen yet
  
• Observations on the flip side
  
• U turn of sentiments in very short span
  
• Uncertainities associated with Interest rate decision during the FOMC meeting scheduled in the thrid week could limit the upside
  
• Possible sharp moves orchetrated by big players to drive away the small investors or for testing the interests of the market
  
• With just 2 weeks left for the Festive season it would be prudent to be cautious on the positions-both existing and fresh
  

#Stay Safe

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