Weekly Index Report on Nifty 50
Indian markets, which experienced a sharp decline of 2055 points from its all-time high of 18887 level to 16828 level, have shown signs of recovery with the onset of a bull run. However, this bullish trend was interrupted last week as a 'Bearish Engulfing' pattern emerged on the weekly time frame, indicating a potential reversal in the near future.
On Friday, 21st of April, the Indian markets initially displayed a positive sentiment with a gap-up opening. However, within a span of 4 hours, it tested the week's low, indicating a sudden reversal. By the end of the day, there was a sharp decline from its previous support levels of 17552 (S1), resulting in a close almost at the previous day's level, with a marginal change of 0%. The market found support at a 'Fibonacci' level of 17621, which played a role in halting the downward momentum.
What can we anticipate moving forward from this juncture?
If Nifty, breaches its support level at 17552, it could potentially trigger a market meltdown, with prices declining to the 16800s level. This bearish scenario aligns with the gap theory, which suggests that bullish gaps are usually filled with either a long bearish candle or a bearish gap. In this case, the bearish gap to watch for is between the levels of 17209 and 17087, which could indicate further downside movement in the market.
If the market continues to show a bullish trend, the key resistance levels to monitor are 17700 and 17869. The 17700 level currently has the highest Open Interest (OI) of 3.25 lakh, with 1.2 lakh fresh positions added on Friday, making it a notable resistance level (R1). The second significant resistance level is at 17869, which is a technical level where the initial decline originated from. These levels may pose as obstacles for further upward movement, and traders and investors should remain vigilant for potential price reversals or consolidation patterns.
The Nifty market may encounter a retest level this week, and there is a possibility of further downside as indicated by the formation of a Bearish Engulfing candlestick pattern in the weekly timeframe. This pattern suggests a potential reversal of the previous bullish trend, indicating that the market could continue to decline. Based on the available data, there are several bearish signals in the market:
- A Bearish Engulfing pattern was observed in the weekly chart.
- Max bullish pain level at 17650.
- Put Call Ratio standing at 0.82, implying a higher proportion of bearish bets.
FII Activity:-
- FII on net sold calls of 56,564 quantities.
- FII on net bought Puts 13978 Quantity on Friday.
FII Outstanding Open interests as of Friday:-
- Long positions of 9.28L and Short positions of 6.57L in Calls.
- Long positions of 8.86L and Short positions of 4.98L in Puts.
Disclaimer
These are just technical analyses based on available data and chart patterns, not a suggestion on buy or sell.
