Nifty Forms Inside Bar Formation, Fresh Move Either Side Can Be Witnessed

by Mitali Dutta on Market Analysis, Market Wrap

Nifty close 11724.10: For the last few days, the mother index is in a phase of correction. At this point, the index is standing at its short term support of 11650 levels. As we can see in the daily chart of the Nifty, there is a gap just below the latest price level. The gap formed between 17th May and 20th May’s trading session and this is a gap of approx. 225 points. So theoretically, there is a chance that the gap could be filled up.

Another aspect is that on the broader picture – (if the gap is filled up and the price starts trading below that) it might look like the gap was an Exhaustion Gap. So, a decent amount of fall can be witnessed if that turns true.

Let’s look at a different time frame and analyze what might take place in the near future.

Hourly Technical: The Hourly chart is little bit choppy but the trend is clearly downward. The most important moving average, 100 and 200MA is above the price and they are about to form a negative crossover. 

Apart from that the last bar has made a Doji pattern, so breaking either side might infuse fresh momentum. 

Technical side, RSI is below 50, Stochastic is trading at its oversold level, ADX is just above 20 and the CCI is below 0 levels. 

So weakness is referred by the indicators. If the index slips from this level, 11600 would be its immediate support but in case it starts trading higher then we can take the 11850 level as the Resistance.

Nifty Hourly Chart
(Nifty Hourly chart)

Daily Technical: As we mentioned earlier. The Daily chart has formed an inside bar formation after a short term correction. At this juncture the 11600 level is important because in case the index starts trading below this there could be a retest of 11250 levels. 

However, 100 and 200MA is below the price so there will be support in case any fall takes place. 

Technical indicators are trading at their normal level. RSI is below 50, Stochastic is standing at 20 level, ADX is slopping downwards (at 23 level) and CCI is at -93 level (approx…) So there is a weakness. As we know for the inside bar – breaking either brings momentum in the security. So if any upside happens 12000-12050 would be the immediate resistance and for the downfall the support is likely to be at 11350 levels.

Nifty Daily Chart

(Nifty Daily chart)

Weekly Technical: In the weekly chart, the index is in an uptrend. But this week the index breached below the spinning top (nearly) formation (forms two weeks ago). So there is chance of further correction.

Technical indicators are in a good position but they all are slopping downward. RSI is below 60, Stochastic is just above the 60, ADX is also just above the 15 level and the CCI is below 60.

If the latest candle’s low is breached, then the next support would be at 11400 level and below that 11000 mark is the another one. But if the index bounces back from this level there could be a consolidation before any move happens.

Nifty Weekly Chart
(Nifty Weekly chart)

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Nifty Technical Chart
(Nifty Technical Chart)

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