The Trend is 'Down' in Short term as well as Long Term for Nifty , Keeping this in mind , let us analyze the Probabilities indicated by Technical Analysis for the next Week.
1. The trade since the start of the June series is on low volumes but has steadily drifted down ,breaking some important supports and giving only shallow bounces which have been sold into. See that the bounce from 5328 only retraced upto 38-40% and is moving down again.
2. The ATR or the Average True Range has dipped to a low of apprx. 65 points indicating a very low movement market. Similarly the Volatility Index ,VIX, is also in the lower range though has started to move up near 20. There may be a range expansion of trade in near future.
3. The Range of trade for last few weeks of 5400-5600 has been broken on the downside , signalling weakness.
4. The Trend is firmly down in the Immediate term ,trading below 5dlema. In Short term ,trading in bearish 5-20dema alignment and in Long term ,below 200dma.
5. The Daily Chart has Indicators in Oversold zone trading near the lower B.B., but with no sign of reversal. The Hourly Chart also has Oversold Indicators which looks ripe for a bounce.
6. The Trendline on Weekly Chart has not been broken till now. Any break and close below it will signal further weakness .
7. The Option Data is also giving a clear indication of the weakness ,
-The broader range of 5400-5800 since start of June series has shifted down to 5300-5600 now.
-The Put-Call ratio of the Index Options is also below 1.0 indicating bearish outlook ahead.
-The Calls have been aggressively added up at 5500 strike this week ,indicating immediate Resistance here.
-The Puts at 5400 exceed the Calls here and viceversa at 5500 ,this may be the tug of war range ,5400-5500.
-The interest In OTM Puts have increased indicated by swelling volumes and increased IV at these strikes.This may be for hedging the Longs as well as speculative buys but indicate weak bias.
8. FII's have taken a clear stand in this range of 5400-5600, they have sold and sold well.
9. The Elliott Wave analysis gives us the following short term probabilities-
- We may be in the 2nd wave of the larger C down since 5328.
- This 2nd wave may be in its B wave correcting a larger portion of A in a W-X-Y pattern.
(marked in Black).Check the developing count in the last post - CLICK HERE
- Alternatively the 2nd wave may have ended with a failure C wave and we have already started the 3rd wave down of the larger C. (marked in Red)
10. Following Insight should be kept in mind while trading the Next Week -
- Trend is firmly down.
- Daily Indicators have given no sign of reversal and may remain be in oversold zone for sometime more, so don't jump to buy and hold any technical bounce due to Hourly oversold charts.
- The Resistances for any bounce indicated by 5d Volume Profiles are at 5420 (Also apprx. 5Wlema), 5450, 5485 levels. The reaction at these levels will indicate the quality of bounce and further trade.
- Short term reversal will be indicated by close above the High Volume node of 5485 in 10d chart ,which also will come near apprx. Bollinger Band mid of 20sma in Daily chart and 5Wema. Positional buying in small quantity only above this level.