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NIFTY

The Indian equity market traded weak for most of the part of this trading week, as it ended in the red for four out of five sessions. Among these, the last two trading days remained particularly weak. The market witnessed gaps towards downside, also digested rate hikes and an increase in volatility as well. The headline index NIFTY closed with a net loss of 629.10 points on a weekly basis.

UNDERSTAND THE STRUCTURE BEHIND THE DOWN MOVE.

We have shown a weekly chart of the Nifty index. The pattern analysis shows that the Nifty index has violated the extended trend line support level. This trend line begins from 13596 levels and joins the subsequent low point and extends itself. Closing below trendline support suggested that the overall bias has shifted towards the negative end.

As shown on the above weekly chart, A strong black window (Bearish) occurred on the chart. The Nifty index prices violated the lower end of the Channel pattern and has ended well below it which also confirms our first theory. This trend line begins from 16410 and further extends to join the subsequent lows.

NIFTY CRASHED, WHAT IS NEXT MOVE?

The pattern analysis suggests that the NIFTY is now below most of the key moving averages. It is moving towards a falling trend line resistance level. This trend line is drawn from the low point of 16410 and joins the subsequent lower bottom. Overall, unless there are fresh positive triggers, it is expected that the markets may continue trading lower. Now in this scenario our first target for Nifty is 15100-15000 levels where bottom to bottom trendline level presents. Given this pattern, it would be crucial to see if the NIFTY is able to defend the 15100-15000 support zone over the coming days.

HOW FAR IT CAN GO?

The weekly RSI is 37.08; it shows mild negative divergence against the price. Stock prices are making higher lows as compared to the previous low, whereas the RSI is showing a lower bottom. We have applied the Fibonacci Retracement on the above weekly chart of Nifty index to determine the price action, support and resistance levels. As per retracement level suggests, the next downside target is 14400 which is 38.2% Fibonacci retracement level and that is where we believe that the final bottom will be made. More important will be to watch the trend line support from the Monthly technical perspective, that the NIFTY can take to support the region of 14400 levels which is also our Fibonacci target.

NIFTY MOVE ABOVE 16100 MUST!!

All in all, there are chances that the global markets may also attempt to find some stability. This will also be helpful for the domestic market to take some breath from this continued weakness that it has been running over the past two weeks. In that case, the coming week is likely to see the levels of 16100 as potential resistance points. So, in such a scenario, we can say that the market firmly placed its short-term bottom and will resume its upward journey. However, given the geopolitical tensions continuing to stay in the market, aggressive positions and excess leverage should be avoided.

BANKNIFTY – IDENTIFYING BOTTOMS USING TRENDLINES.

The Bank Nifty has been moving lower in a corrective pattern. The volatility remained immense given the number of uncertainties that surrounded the happenings around the world. The Banking Index oscillated over 1785 points and finally ended with a net loss of 1469.85 points (-4.25%) on a weekly note. The pattern analysis of the weekly charts shows that the index is moving towards extended trend line support which is around 32500-32600 levels. For the BANK NIFTY to avoid any confirmed violation of this support, it will have to crawl back above these levels. The longer it remains near this point, the higher will the possibilities of the incremental weakness getting in.