On Friday NIFTY
index settled at 12271.80 up by 1.53 percent on weekly basis. On weekly chart
recently price has settled well above resistance line of a parallel channel with
a partial gap suggesting that bulls are having upper hand. Price has been
witnessing nice up trend and currently nifty is moving in CD leg of a bearish
AB=CD pattern which gets completed at 12735.65.
14 period
weekly RSI has recently placed a higher value than price made last top at
12103.05 in June this year. Higher value on RSI along with price making new
high neglecting possibility of a bearish divergence on weekly basis.
Weekly MACD
has been staying in bullish territory along with a bullish cross above its
signal line favoring bullish momentum and suggesting that there is more juice
left in current move and showing potential for completion of AB=CD pattern
based on weekly chart.
However
daily chart is showing lack of conviction and formed an identical shooting star
on Friday. There is a tiny contradiction between weekly and daily chart. Weekly
chart is still loaded with strong bullish momentum and showing potential for
further upside.
Based on study
of price and oscillators on weekly and daily chart areas of 12240 will remain
crucial to watch out in next few sessions. Any failure of this level will
result in a retest to 12100-12040 zones. Failure of 12000 seems very less
likely where as failure of the same could result in failure of momentum on
weekly chart and then a deeper correction could be imminent up to 11850 zones.
Areas of 11700 will remain key support and failure of 11700 will invalidate complete
bullish structure and then deeper correction towards 11000-10400 can’t be ruled
out.
Currently resistance
is placed at 12300-12320 zones and any sustained move above these levels will
bring more confidence to bulls and then rally towards 12700 zones can be
expected in coming days.
However, a short-lived
correction up to 12100-12050 zones can’t be ruled out but stability above 12000
will maintain bullish scenario on both weekly as well as daily chart and 12700
can be the destination for current move. Areas of 12700-12750 seems potential
reversal zones based on current charts but stability above 12750 for 2-3
sessions consecutively would help bulls to gain further confidence and then
rally can lead up to 13000-13300 zones.
Open
interest based Put call ratio of weekly option expiring on coming Thursday is
standing at 1.65. It signals that most market participants are betting on a likely
bearish trend going forward. For contrarians, it is a signal to go against the
wind.
Based on Friday’s option data max pain level for
weekly expiry is standing at near 12150 that suggests weekly expiry is likely
to happen somewhere near 12150 zones. In case if market manages to hold above
12200 in week starting from December 23, then this max pain level can shift
upward and market will continue moving up.
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