NIFTY-Weekly Outlook-Venkat's Blog

The Index snapped its past 2 weeks of losing streak and bounced back sharply. Past week was a very eventful week. The markets witnessed huge stop hunting which was evident from the kind of move on either side during the last session of the week. The big move happened after the Index broke 21850 and the Gap between 21850 and 21960 created during the sharp fall during second week of Jan 24. In the process it kissed the earlier peak and made a marginally higher ATH. The subsequent sell-off was equally sharp. The ensuing week is crucial for the direction and the target.

A few observations from the weekly charts are:

• The index moved in a range of 697 points viz. between 21429 and 22126
  
• The oscillators of different time frames are showing mixed signals
  
• Option open interest to drive the direction of the market
  
• Expected scenarios for the ensuing week
  
• Unlike the earlier bull run, we find sellers emerge after every spike
  
• Higher volatility likely to continue for a couple of more weeks
  

 
Additional interesting observations

• Last week candle is a strongly bullish candle. However, the daily candle shows signs of uncertainty
  
• Index may find supports at 21760, 21640, 20520 and the index could face resistances at 21970, 22130, 22345
  
• There were multiple gaps created during this dream run. The levels were repeatedly mentioned in the previous blogs. Since they are far away for now, they will be inserted back when relevant
  

Final Note

• The Index has stayed well above 55 DMA at 21108 and the 200 DMA at 19633
  
• The sentiments seem to take diagonally opposite directions within a shorter time frame. This requires cautious approach
  
• The Observation made in the previous blog: ”After 2 weeks of bearish candle, it is normally expected to be followed by another bearish candle. However, this may get negated if the Index manages to reclaim 21760 zone”- This trigger happened and the market witnessed whipsaw moves on either side hunting the stops
  
• There is a striking similarity between the formation in the weekly chart and that of the Monthly charts a few weeks ago. This is more of Bullish in nature where we saw a break above the triangle formation lead to a big up move. Only a close below 20850 will negate this. Index is still within the ascending channel. Break below 21050 could lead to more trigger of stops and we may quickly see 20850
  
• The fault lines lies at 21540 at the lower end and 22130 on the higher end.
  
• Most likely scenario would be a consolidation between 21540 & 22130. Breach on either side can lead to 200-300 points move
  
• SIP funds and the flows expected to support the market
  
• The ensuing week is crucial to decide further direction and target
  

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