#Nifty directions and levels for the 3rd week of August.Good evening, friends! 🌺🍬 Here are the market directions for the 3rd week of August:
Global Market Overview
In the previous week, global markets experienced a consolidation after a sharp decline, which indicates that the market is structurally bearish. So, what about this week? My expectation is that the bearish sentiment might continue because the US market will release PPI and inflation data, which could be a key factor in determining the next direction.
Nifty and Bank Nifty
Last week, Nifty and Bank Nifty saw significant ups and downs, but this movement happened within a range. So, what about this week? Let's break it down.
As per the chart, both Nifty and Bank Nifty have a similar range-bound structure. However, the market closed at the top of this range by the end of the week. So, if the market starts with a bullish bias, it may reach the swing high once again. This is because, as we mentioned in the previous post, if the market breaks the 50% level in the minor swing, it will lose the strength of the current trend. If this happens, it may reach the Fibonacci levels of 61% to 78% on the upside. However, there are two variations for the bullish sentiment.
For Nifty:
1. First Variation: If the initial day's candle closes with a solid bar, then the market may continue the pullback with minor consolidation around the Fibonacci level of 61% in the upcoming sessions.
2. Second Variation: If the market faces rejection around the top of the channel or if the week starts with a negative candle, then the range-bound market may continue further.
Why did I mention the diagonal pattern? (Second Variation:)
because the previous structure also looks like an expanding diagonal, and the pullback also broke the 38% level. So, both conditions suggest a minor reversal. However, don't expect a major move because a diagonal is an accumulation pattern when it forms at the bottom of a trend, so it could take some time for the next movement.
The Bearish Variation:
The bearish variation suggests that if the market potentially breaks the channel, then it may continue the correction. There are some minor levels to watch, which is typical. If the market breaks the 38% level in the minor swing, we can expect the next target to be 78%. It may resemble a diagonal pattern, but there is a key difference:
> that, if the correction follows this variation, the decline could be sharp and fast.
> However, a diagonal typically doesn’t have much volume and usually faces rejection before the channel breakout.
