Technical & Derivatives Report
December 10, 2020
Bank Nifty as well started on a positive note and with positive
momentum throughout the session added another 1.48% to bulls
kitty to eventually end tad above the 30700 mark.
Momentum is strongly gripped by the bulls however we have been
mentioning since last week to avoid aggressive bets as the prices
are overstretched from its short-term moving averages and as
oscillators are in deep overbought territory. Now prices have
reached a confluence resistance zone formed by the higher range
of Rising Wedge on the daily chart and 88.6% retracement level
taken from all-time high level to March low. Hence, we would
reiterate our view to have a stock-specific approach from this
basket however avoid aggressive bets. As far as levels are
concerned, immediate resistance is placed around 30850 - 31150
whereas support is placed around 30500 - 30250 levels.
Support 1 – 30500 Resistance 1 – 30850
Support 2 – 30250 Resistance 2 – 31150
Exhibit 1: Nifty Daily Chart
Sensex (46103) / Nifty (13529)
The global set up was just ideal yesterday morning to have yet
another gap up opening in our market at fresh record highs.
Subsequently, index went into a consolidation mode for the
remaining few hours. But the buying momentum accelerated at the
stroke of the mid session to conclude the Nifty convincingly above
13500 by adding another percent to the bulls' kitty.
Our markets reached yet another milestone of 13500 with ease and
banking as well as Reliance were the major charioteer of the move
yesterday. Since we are in an uncharted territory, sky's the limit for
our market; but in our sense, we have now reached the extreme zone,
at least for the current vertical move. With a broader view, 14000
and beyond levels are very much possible, but for a time being,
13500 - 13600 are the extreme levels as per few fibonacci ratios.
Let's see why these levels are considered important. The 'Golden
Ratio' (161%) of the 'Price Extension' of the previous up move is
placed at current levels. This level coincides with the 'Multi-year
Upward Sloping Trend Line', drawn by connecting all important highs
from March 2015 on the monthly chart. Hence, some profit booking
around these levels cannot be ruled out.
Yes, we agree to the fact that a strong trend up or down, doesn't
necessarily follow any theory. But there is no harm being a bit
conservative at times. Hence, since the last 3 - 4 days, we have been
continuously advising booking profits in the rally and avoiding
aggressive bets overnight. As far as support levels are concerned,
13449 - 13375 would now be seen as key points.
Support 1 – 13449 Resistance 1 – 13600
Support 2 – 13375 Resistance2 – 13700
Exhibit 2: Nifty Bank Daily Chart