Nifty Analysis For 11Th May Expiry

The Nifty 50 index closed in the red last week, forming a shooting star candlestick pattern on the weekly timeframe. This pattern is typically considered bearish and tends to form at the top of a chart. Is there a possibility of a downside retracement, or is this the end of the recent rally in the markets?

Before the last week of April, there was a large bullish candle that rejected the bearish engulfing pattern.

What can we anticipate from the markets going forward?

Upon analyzing the chart, it becomes evident that the 18100 level is a significant resistance point for the Nifty. Whenever the market reaches the 18100-18300 range, it experiences a significant downturn, making lower lows. If Nifty stays below 18100, it may lead to another fall towards the 17900 level, and closing below that may lead to the 16800 level again. However, if Nifty closes above 18200 in the upcoming week, it may move towards a new high, with a target of 18700 in the near future.

The daily Relative Strength Index (RSI) indicates that Nifty is currently in its overbought position. Therefore, Friday's closing could be viewed as a minor correction.

The Nifty has formed an inverted head and shoulder pattern, which is a strong bullish pattern that typically forms at the bottom of a chart. The inclined neckline of this pattern is at around the 17900 level, which could be the retest point for Nifty, and an important level for a potential bounce back. The high Open Interest on the Put side at 17900 further supports the significance of this level. It's worth noting that the Friday's closing could be seen as a small correction, as the Daily Relative Strength Index (RSI) shows that Nifty is currently at an overbought position.

What does the data say about Nifty?

To begin with, Nifty is currently trading at its historical resistance level of 18100-18300, which has acted as a major resistance in the past resulting in significant corrections. Additionally, the maximum Open Interest (OI) has been accumulated at 18100 in both Calls and Puts, indicating that this level may serve as a make-or-break level.

The current Put to Call ratio (PCR) is 0.8, which is generally viewed as slightly bearish to neutral.

OI data: The maximum Open Interest (OI) for calls is at the 18200 resistance level with 2,34,381 contracts, while the maximum OI for puts is at the 18100 support level with 1,23,495 contracts, followed by the 17900 level with an OI of 1,02,313.

FII Option data

1. Net 50,000 calls have been bought
2. And Net 1,50,000 puts have been bought

So, net Bearish with -1,00,000 qty

FII futures data:

The FIIs have sold net -800 Crores

Disclaimer

"The above analysis is solely based on technical data and chart patterns, and should not be considered as a recommendation for buying or selling any financial instrument."

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