NIFTY-Weekly Outlook-Venkat's Blog

Dec 16, 2023

True to the characteristic of the animal, nothing can stop the charging Bull. Another Gap up opening on the weekly option expiry day was indicative of the continued strength of the up move. In the process the Index made new ATH. Major factors contributing to the change in sentiments are: stable oil price and economic data supporting a possible beginning of rate cut cycle. The weekly candle still shows bullish nature of the move. As observed in the previous blogs, this appears to be a new trend emerging.

A few observations from the weekly charts are:

• The index moved in a range of 723 points viz. between 20769 and 21492
  
• 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 3 of a new trend.
  
• Since the Index continues to post new ATHs, there are no reference points on the upside. Only projected levels based on studies can be taken for references
  

Additional interesting observations

• Another week of strong bull candle with a closing near the top
  
• Index may find supports at 21310, 21170, 21030 the index could face resistances at 21640, 21820, 22020
  
• 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)
  
• 20926-21116 (14th 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 18962 and stays above 55 DMA at 19824
  
• Index has been continuously posting gains for the past 7 consecutive weeks
  
• Additional huge gap has been created during the option expiry day
  
• Even if there is a reactive decline after 7 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)
  
• This study suggests approximately 3150-3300 points from the start to the top shown in boxed region on weekly line chart. By that calculation the primary target level for this move is close to 22220. Does this sound similar to the peak of 18887 seen in Nov 22, 19991 in July 23 and 20222 in Sep 23. Odds favors such a move given the present mood in the market
  
• The Index is likely to consolidate between 21,200 and 22870
  
• This time the fault lines are at 21140 and 22640.
  
• Though the Index closed near the top of the range and the momentum still favours further gains
  
• The move has been too fast and too sharp. Many missed even catching the tail of bull and may jump in to follow the herd
  
• It would be interesting to watch the scenario as it unfolds
  
• Observations favoring further upside
  
• Third consecutive stronger bull candle with a closing near the highs marking the arrival of the Third soldier
  
• Friday’s strong move suggests the risk appitite is still intact
  
• No distinct reversal signal seen yet
  
• Observations on the flip side
  
• U turn of sentiments in very short span
  
• Possible sharp moves orchetrated by big players to drive away the small investors or for testing the depth of the market
  
• Possibly the last active week before the Festive season and there could be profit booking
  

#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.