Technical & Derivatives Report
During last week, Bank Nifty resisted around 22500 and corrected
to breach the 21000 mark on Thursday. The index recovered
marginally and ended with gains of over a percent.
On the weekly chart, the Bank Nifty index has formed a 'Doji'
candle at its '20 EMA'. Thus, last week's high and low of 22480 and
20926 will be the important levels to watch for the near term. A
move beyond this range will then lead to some momentum. Until
then, traders are advised to trade with a stock specific approach.
The intraday supports for Bank Nifty are placed around 21350 and
21100 whereas resistances are seen around 22000 and 22250.
Support 1 – 21350 Resistance 1 – 22000
Support 2 – 21100 Resistance 2 – 22250
Exhibit 1: Nifty Daily Chart
Sensex (35171) / Nifty (10383)
The previous week’s tail end surge was followed by a good start
on Monday; but the overall trading range was extremely narrow.
We continued upward momentum on the following day as well, in
fact on Wednesday, markets started with a bang at three months
high. But all of a sudden, markets took a nosedive from higher
levels. This turned out to be a profit booking after a consistent
rally of nearly 800 points in a span of 5-6 days. Last couple of days’
price action was more of a range bound action with a positive bias.
Eventually, Nifty ended the week by adding over a percent from
the previous weekly close.
During the midst of the week, we witnessed a reality check at
10500 and fortunately, the profit booking did not extend too
long. In fact, prior to Friday’s session, we were hoping Nifty not to
close below 10300-10250 levels. Because this would have
resulted in a formation of ‘Shooting Star’ pattern that too near
‘200-SMA’ on the weekly chart. However, due to Friday’s close, we
can see a formation of ‘Spinning Top’ pattern and this generally
indicates neutral bias i.e. neither the bulls dominated, nor the
bears had the upper hand. Ideally a close beyond 10500-10550
would have suggested a stronger closer but nevertheless bulls
somehow managed to defend their territory. Now, the week’s low
of 10194 would now be seen as a key support and as long as we
are above it, there is no reason to worry. So practically speaking,
traders are advised to trail stop losses higher at this level and a
breach of this would result in a strong bout of profit booking in
Exhibit 2: Nifty Bank Weekly Chart
On the flipside, we expect the rally to continue and a move beyond
10500 would certainly unfold the next leg towards 10700 - 10850
levels. Since, there is a cluster of resistance at every 200 points up
move from hereon, traders are advised to take one step at a time
and should ideally avoid carrying aggressive bets overnight.
Support 1 – 10200 Resistance 1 – 10370
Support 2 – 10100 Resistance 2 – 10450