And where is Nifty heading on Dec 09 with new weekly Option Chain expiring on 12 Dec 2019?
Nifty opened up a gap up with a net gain of 28.95 points at 12,047.35 and remain bullish waiting for positive cues from the market for an initial one hour of trade. In absence of positive cues from domestic or global markets, the outcome of no change in the Repo rate cut by MPC and reduction in estimates of GDP growth from 6.1 % to 5% created negative impact pulling the Index down to days low at 11,888.85. The index closed at 12,921.50 due to the short covering of bears making lower highs and lower lows in Nifty and Bank Nifty both. In daily chart Nifty and BankNifty made bearish candle indicating bearish outlook. On the weekly chart, Nifty made bearish Engulfing while Bank Nifty made Dark Cloud Cover bringing down the trading range.
The DIIs were net buyers today with turnover 210.72Cr and FIIs were net sellers with -867.66Cr. Total 9 stocks advanced, and 41 declined from the stack of nifty 50. On the weekly chart, Bollinger Band is still indicating the midterm bullish strength remains in the trend. In 60 minutes, Nifty has reversed from the lower trend line of descending channel hence a pullback till 12,000 (61% Fib retracement from 11,888) can be expected.
Today’s closing at 11,921.50 is below 13 DEMA at 12,000, daily Pivot at 12,032.78, weekly Pivot at 12,044.87. The Index is well above the midway of the daily ascending channel (broader) and has got multiple resistances. Stochastic, at 33.5, has come out of the overbought zone whereas RSI is at 50.48 and MACD is above zero with bearish crossover indicating some more correction and consolidation.
Nifty’s new resistance levels have shifted upwards to 11,935, 11,969, 11,994, 12,025, 12,071 and 12,100. The support levels are at 11.900, 11,882, 11,840 and 11,802. Looking at current immediate support and resistance level for the next trading day seems to be from 11,850 to 12,050. Nifty has entered in a short term correction phase and would need strong domestic and international cues to move above 12,039 to continue its journey towards 12,150 and 12,200. If Nifty slides below 11,800 level, it may initiate a downside corrective move towards 11,500 or 11,650 level.
As per Option Chain data new Put writing was seen at lower levels like 11,500, 11,700, 11,800 and 12,900 whereas heavy call writing at 12,000, 12,050 12,100, 12,150, 12,300, 12,400 and 12,500 levels. The trading range has shifted quite wide indicating volatility in coming trading sessions. Looking at the Open Interest data at various strike rates along with the strike shifting forces indicate the possibility of the next trading range between 11,800 to 12,050. The current PCR of the new option chain series has reduced to 0.62 from 1.0 which indicates bearishness and some more correction on board. If the index moved toward 12,000 some profit booking may start which may further lead to volatility and choppiness in the market.
Technical analysis with a sound understanding of the market is the key to trading success, however, sometimes market forces are stronger than the past analysis. Unexpected (domestic or international) factors make the technical analysis go haywire for a while, hence we have to monitor fresh data and new dynamics of the market during trading hours to consistently make money. We trust the information will be helpful in your own analysis of the market and make trading a profitable and better experience. This analysis has been shared for educational purposes. Please seek your financial adviser’s guidance before trading or investing.
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