Index Report on Nifty 50-Technical Analysis
The AVERAGE weekly VIX(volatility index) for the benchmark index stands at 13.64. On the previous trading day, VIX(volatility index) stood at 12.75 trading at a lower rate than the weekly average. Thus, indicating low volatility in the market.
The average PE for the week stood at 20.896, whereas on the last trading days i.e. PE stood at 21.06, 21.11, and 21.1 respectively. Reflecting moderate expensiveness of the market.
The warren buffet ratio (Market Capital to GDP) stood at 89.02, reflecting a moderate expensiveness of the Indian market whereas the same for the US stood at 155.9, reflecting hyper sensitiveness for the US market When talking about psychology, the market is in an oversold position as indicated by MMI(Market Mode Index). The MMI for the week stood at 25.65- entering into extreme fear mode. (MMI WHEN BACK TESTED IS 86% times correct).
-Currently Nifty is trading at roughly 8.88% below the Time High (ATH).
-Prev. close 17856
-Low formed on 30th -17405
-Low formed on 1st of Feb(The budget day)-17353
-High formed on 1st of Feb(The budget day)-17972
-Technical reason for 17407-17348 to be called a strong demand zone, as the area mentioned above marks high and low of window formation in mid of Oct 2022.
-Retest-when the index showed downside movement of roughly 8.8% from ATH Spinning -Top formation in a daily time frame with a significant volume was formed on 1st of Feb, 23. With a low of 17353 and a high of 17972 marking the formation of a low.
The spinning top is a single candlestick pattern formed either at low or at high, marking the end of the trend.
WHAT NOW,
-The benchmark index is at its consolidation phase OF NEARLY 600 points. High and Low of the budget day.
-17407-17348 acts as a strong demand zone for Nifty-50, to enter into a bearish phase it mandates for Nifty-50 to have a sustainable close below 17400.
-Psychological supply zone 18000.
-To enter into a bullish trend index sustainable closing above 18000 levels is a compulsion. Of course, every candlestick should be supported by the volume.
-Talking about the Greeks Put call ratio for the benchmark Index Weekly and Monthly as of 10/2/2023,21.50 IST stands at: 0.1676 and 0.6212 respectively, showing a supply formation on weekly basis.
What can be a good strategy for traders
Disclaimer:- It is not a recommendation, it is for educational purposes only.
#LONG on index derivative above 18000 levels if confirmed by volume.
#SHORT on index derivative below 17355 levels.
