Weekly Technical Analysis

Last week, Nifty Futures maintained the 5k mark and did not go below the same. In the recent past, we had Nifty Futures giving the longest phase of recording higher closing for 12 consecutive days. From a low of 4479 on Sep 18 to an all time high of 5267.80 on Oct 3, this dynamic rise has been a outcome of an unfilled gap at 4557.50 to 4640 level.

On the daily chart, 20DSMA stood at 4761.73 indicating bullishness. The Directional Indicator is bullish and showing great strength. The Oscillator is in the overbought zone indicating that we are in a euphoria stage. During the week, we had three days of higher closings out of four trading sessions.

On the Weekly Chart, 20WEMA stood at 4476.65 indicating strength. The Directional Indicator has started depicting strength whereas the Oscillators too, are Bullish, even though they have just entered over bought zone. We had a continuous bull run for the past 7 weeks and a higher weekly closing for 7 weeks in a row. This brings to a Fibonacci number of 8 which happens to be the next week. Hence, the movement in the next week will be viewed with lot of interest as it could result in a possible change of direction for the market.

It has support at 5120 and 5065 levels and faces Resistance at 5260, 5325 and 5400 levels. Presently, all the time frame (Short, Medium and Long) trends are upwards. The Short term trend will turn downwards if 4880 level is broken whereas the Medium term trend turns downwards if 4560 is violated.

For the very short term trader, 5120 level would be the stop loss for long positions. In case, this level breaks, then one can book profits on long positions and sell Nifty 5450 Calls and go for Bear Spread of buying 5100 Put and selling 4950 Put. In case, this level holds for the next couple of trading sessions, the trader can go for Bull Spread by buying 5100 Call and Selling 5300 Call and also selling 4200 Puts to reduce the cost.

Nifty Futures Open Interest stood at 3.25 cr contracts up by 0.41 % on the last trading session of the week. The Annualised Volatility stood at 29 %. Sectorwise, on a medium term horizon, Textiles and IT stocks could be picked on every declines.