Nifty: The opening session of week started on pessimistic note as Nifty index nosedived sharply and went below its previous week low. Subsequently, we saw decent recovery from the support level of 10400. In the process, Nifty index ended the week on a record closing high and gained 0.27% over its previous week close.
- The first half of the week was in-line with our expectation as index approached towards 10400 however we have not anticipated index to cross its previous all-time high of 10552.40.
- The last week candle resembles a formation of Hanging Man pattern. The said pattern requires confirmation in terms of trading below the last week candle low i.e. 10404.
- The bearish divergence on weekly chart is intact and last Friday index formed bearish divergence on daily chart. Also, on a monthly chart, the 161.8% reciprocal of its entire move from the top of 9119.20 to the bottom of 6825.80 likely to act as a near term hurdle.
- In a coming week, 10404 will act as a strong support and any break below this level will lead to further correction towards 10320. On the other side, 10640 / 10720 are the near-term resistance.
Banknifty: Last week, the Nifty Bank index remained under pressure during the first half however the bouts of buying interest during the second half helped it to pare all its intra week losses and Nifty Bank index eventually ended with a gain of 0.24%.
- Once again, the Nifty index hit a fresh all-time high however the Nifty Bank index is still struggling to cross its late November, 2017 high of 25953.50 which continued to remain a cause of concern for us.
- Looking at the daily line chart, we are seeing a Symmetrical triangle pattern and index is likely to mature towards either way breakout or breakdown. Hence, traders are advice to prepare for volatile move.
- We have repeatedly highlighted the bearish divergence pattern formed on daily, weekly & monthly chart and said formation is still intact.
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- Going forward, the last week low of 25232 will act as an immediate support and any break below this level will trigger fresh sell-off towards 24800. On the other side, 25780 will act as an immediate support. Any sustain move above this level will open the doors for new all-time high and we may see index to head towards 26000 / 26120 levels respectively.
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