IndiaTechnical Analysis

Nifty Technical Analysis

The NIFTY 50 is a benchmark Indian stock market index that represents the weighted average of 50 of the largest Indian companies listed on the National Stock Exchange.

Now, let us analyze the charting of the Nifty 50 index.

Time frame: Daily chart

Nifty closed in red at 16983.20 on Tuesday i.e 30th November 2021.On a daily chart, we can see that Nifty has an immediate resistance at 17574 and the next resistance can be seen at 18218. Talking about the support zone, the previous resistance zones act as the support levels in the future, which can be seen at 16722 and the very next support levels are 16352 and 15912.

On plotting the Exponential Moving average(EMA), with inputs being 20 and 50, we can clearly see that the EMA(20) line is about to cut the EMA(50) line. If so, more downfall in the markets can be seen.

Timeframe: 5 minutes

In a 5 minutes time frame, Nifty has taken resistance multiple times at 17159.75 between 29th November 2021 and 30th November 2021. This can act as a strong resistance level again for coming days.

Fibonacci Series

We can see that when the Fibonacci indicator is plotted on a daily chart time frame, Nifty has reversed from its ATH by more than 50%, and we can expect the Nifty can test the levels of 16690-16697 i.e up to 61.8 retracements (as per the Fibonacci levels) in next coming trading days.

Pattern Observed:

On a daily time frame, we can observe that a head and shoulder pattern was formed over the months of September to the end of November. This pattern is an indicator of a trend reversal. Nifty has been in a continuous uptrend since July-August. Now, as it can be observed, the market has been bearish over the last few trading days. Thus, we can expect more downside.

FII & DII data:

F&O segment

FII net purchases for the month of November 2021 is Rs.22,950.69 crore for Index Options and Rs. 961.86 crore for Index futures. The open interest volume for the December month-end expiry put option is highest for the strike price 17000 whereas for the call option the open interest volume is highest for the strike price 18000.

Cash segment

November 2021 saw a huge cash selling of Rs. 39,901.92 crore from the foreign institutional investors(FII) whereas Domestic Institutional Investors(DII) invested Rs. 30,560.27 crores in the cash segment.

What can we expect?

Since, as per the Fibonacci levels, Nifty can test the support placed at 16725. Breaking those levels can be a cautious alarm for the investors and traders, and we can see a further fall up to 16352 and 15912.45 levels also. As per the RSI which is at 31.00, which is in the oversold zone, the market will soon bounce back.

With all the investments getting pumped from the DII in the cash segment and by the FII in the F&O segment, we can see that Nifty has a clear uptrend in the future. If Nifty is able to sustain the levels of 16725, we can see a range-bound between 17000 to 18000 levels in the next 10 to 15 trading days, so that the market can stabilise before another bull run gets started. 

Disclaimer: This is just my analysis, rather than a trading suggestion.

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