NIFTY weekly view August 3 -7
In my last weekly’s review (link below)
I feel there are few very important levels, yet to be crossed. One such level I am watching is 11269, 11370 and then 11600. There are chances that NIFTY may show picture perfect reversal at these levels. So it is better to attempt limited risk shorts at these levels.
For reliance , 2250-2350 is the zone where technical reversal is possible.
The chart shows the possibility of breakout which can go to 11270 and 11370 levels.
NIFTY crossed 11270, came close to 11370 and reversed.
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My Observations for the week gone by
NIFTY closed 1.08% down. This was the first red week after 6 positive weeks. The action is still not very bearish.
BANK NIFTY, the weaker index, actually showed lower high and lower low formation for the week.
Reliance Industries, the stock that was dragging the index along is showing the sign of correction.
NIFTY IT index, also showing indecision on weekly timeframe.
NIFTY Price/Earning ratio touched 30+ this week.
Option data is showing resistance at 11200
FII and DII combined were net sellers for the last full week.
VIX is entering lower volatility region 22-25
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About the rally so far and Am I still calling this bear market rally?
Last 4 months, NIFTY 50%+. This kind of strong pullback indicates, there are two possibilities
Market has assessed that corona virus is no longer a fear and the reaction in March was overdone, now Market has erased that memory and has moved on with it’s larger trend from 2009, that is bull market.
This March 2020 meltdown has actually altered the way business work, and the impact on earnings will start showing up in subsequent months.
In possibility 1, the liquidity measures by central banks of the world will slowly start tapering. In possibility 2, the market will reward few survivors and punish many - highly polarised markets.
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My view for August- October (Very rough sketch)
I do not think NIFTY is likely to see a similar kind of long 1000 points bar in these 2-3 months. The best case that I see is NIFTY invalidates, whole bear market hypothesis and touches 12500, new high or very close to low high.
** Till NIFTY crosses the bear market challenge level 11400, I won't actively consider this possibility
I am more towards the regime change that I talked about. NIFTY may slowly consolidate in August September in the 10%-15% range. 10000-11500 range.
My view for the coming week.
I take consolidation with a negative bias view. The pattern target is 10860. I sense that this week, NIFTY is likely to hit that zone. I need to see if this happens with momentum.
There should not be any closing above 11130, If there is any closing above this level, short bias is challenged.
If NIFTY crosses above, 11195-11200, actually bias is on the long side.
Summary : Bearish consolidation view with target 10860-10900, reversal in view at 11200.
If there is a gap down below 11000, that will confirm that this time correction may not be shallow. And any close below 10800, means the possibility of more downside.
Some weekly trade ideas based on this view
Monthly
I have positional (August series short- 11300 CALL sell SL 11380 on spot) - Monthly.
For this week
Sell 11200 CALL SL 11220 on spot
Sell 11100 CALL SL 11130 on spot
Sell 11000/10800 Debit PUT spread. For playing a sudden slope towards.
On the gap down and touch of 10750, reversal trade by creating 11700/11600 Credit PUT spread.
Have a nice trading week ahead!
My last week's view
I feel there are few very important levels, yet to be crossed. One such level I am watching is 11269, 11370 and then 11600. There are chances that NIFTY may show picture perfect reversal at these levels. So it is better to attempt limited risk shorts at these levels.
For reliance , 2250-2350 is the zone where technical reversal is possible.
The chart shows the possibility of breakout which can go to 11270 and 11370 levels.
NIFTY crossed 11270, came close to 11370 and reversed.
======================================================================
My Observations for the week gone by
NIFTY closed 1.08% down. This was the first red week after 6 positive weeks. The action is still not very bearish.
BANK NIFTY, the weaker index, actually showed lower high and lower low formation for the week.
Reliance Industries, the stock that was dragging the index along is showing the sign of correction.
NIFTY IT index, also showing indecision on weekly timeframe.
NIFTY Price/Earning ratio touched 30+ this week.
Option data is showing resistance at 11200
FII and DII combined were net sellers for the last full week.
VIX is entering lower volatility region 22-25
=======================================================================
About the rally so far and Am I still calling this bear market rally?
Last 4 months, NIFTY 50%+. This kind of strong pullback indicates, there are two possibilities
Market has assessed that corona virus is no longer a fear and the reaction in March was overdone, now Market has erased that memory and has moved on with it’s larger trend from 2009, that is bull market.
This March 2020 meltdown has actually altered the way business work, and the impact on earnings will start showing up in subsequent months.
In possibility 1, the liquidity measures by central banks of the world will slowly start tapering. In possibility 2, the market will reward few survivors and punish many - highly polarised markets.
========================================================================
My view for August- October (Very rough sketch)
I do not think NIFTY is likely to see a similar kind of long 1000 points bar in these 2-3 months. The best case that I see is NIFTY invalidates, whole bear market hypothesis and touches 12500, new high or very close to low high.
** Till NIFTY crosses the bear market challenge level 11400, I won't actively consider this possibility
I am more towards the regime change that I talked about. NIFTY may slowly consolidate in August September in the 10%-15% range. 10000-11500 range.
My view for the coming week.
I take consolidation with a negative bias view. The pattern target is 10860. I sense that this week, NIFTY is likely to hit that zone. I need to see if this happens with momentum.
There should not be any closing above 11130, If there is any closing above this level, short bias is challenged.
If NIFTY crosses above, 11195-11200, actually bias is on the long side.
Summary : Bearish consolidation view with target 10860-10900, reversal in view at 11200.
If there is a gap down below 11000, that will confirm that this time correction may not be shallow. And any close below 10800, means the possibility of more downside.
Some weekly trade ideas based on this view
Monthly
I have positional (August series short- 11300 CALL sell SL 11380 on spot) - Monthly.
For this week
Sell 11200 CALL SL 11220 on spot
Sell 11100 CALL SL 11130 on spot
Sell 11000/10800 Debit PUT spread. For playing a sudden slope towards.
On the gap down and touch of 10750, reversal trade by creating 11700/11600 Credit PUT spread.
Have a nice trading week ahead!
My last week's view
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