Last week we expected bulls to be stronger and the Nifty scaled easily over the 8335 resistance on the first day of the week and held it through expiry bringing 8423 in play ( short of the expected 8450 above 8335) .This week we continue with the bullish stand and would urge dips to be bought. The markets have formed a balance and we have a minor short position opened with stops defined above 8460 spot.
Last week’s post can be reviewed here – http://vtrender.com/nifty-bn-weekly-view-spot-for-22-26-june15/
Let’s look at the weekly charts and see how it could play out. We are not trying to front run the markets here but trying to gauge the strength of the auction to move from point A to point B. The Points are chosen through a careful study of the Market Profile and the auction strength and bias determined through it’s principles. The core idea being that the markets always move from zones of acceptance to zones of non- acceptance even rejection.
Outlook:
(Dip expected to find support near 8260. Above 8455 resistance may jump to 8540 and 8580)
The Chart above shows that last week’s auction was in the minus development zone of the profile dated 01- 05 June. The Minus Development zone as the name suggests is an area of reduced activity and quick moves. It also is an excellent resistance zone. Our view of 8450 resistance last week was based on this minus development.
The Profile shows a proper auction in this zone which is a bullish factor. The sellers have to come back in from near the top of that profile to stay inside and exert control on the short term auction.
A failure to do that would invite higher levels upto 8640 and 8750 during this relatively long series.
Charts show that it would not be wise to hold short positions above 8455 this week.
Traditionally July is a bullish month and records from 2006 have pointed to a return of over 8.4% in this series High to Lows.
We believe the zone of 8260 ( low of the current profile and bottom of the minus development zone) will be an excellent support and all dips should be used to initiate long positions.
Second support at 8180 during the coming sessions. All long ideas are off the table if 8180 breaks again.
BankNifty :
Outlook :
(Resistance is strong at 18580. Weakness confirms on move below 18160. Likely to drop to 18040/17940 below it.)
Just like the Nifty chart posted above the BankNifty also traded the minus development zone of 01- 06 June. In the process however like the Nfty, the BankNifty has created value higher and we are looking at dips to add long exposure for July series.
Dips upto 18060 should be used to cover shorts and build long positions for 18800 tgt with stops below 17940.
Further down 17580 mentioned last week is also a strong buying zone in this index.
Up above 18580 cross would mean liquidation of short positions opening up 18830 and 18940 immediately. Charts show that it would not be wise to hold short positions above 18580 this week.