Last week was an ideal “sell on rise” market as the expected test of year lows happened. On a previous break of 8000 BRN we had pointed out that the response seen was emotional and a retest was due. It took the Nifty 5 more weeks post that event to come back , but we did get a weekly close below 8000 for the first time since OCT 2014. Having got the test we are still not convinced of a firm bottom in place and possibility of a further slide is still high.
Last week’s post can be reviewed here : http://vtrender.com/nifty-bn-weekly-view-spot-for-8-12-june15/
Let’s look at charts and what Market Profile wants to convey for the coming week :
Outlook :
(Bounds are rigid at 7920 spot lower and 8065 higher )
We are again seeing poor lows on the weekly chart which does not convince us of a low being in place.
On Thursday at the close we had evidence based on Auction Market Theory ( AMT) that the objective of the volumes seen on the sell side were close to the move maturing. However on Friday the expected upmove did not take off fully which according to AMT does not point to a lot of buying interest at the lows.
We will use 7920 spot LVN from previous auctions as a ref point for the early sessions of the coming week.
Since we saw short covering just above 7920 last week , it does not point to a large move below 7920 yet unless new business picks up below 7920. Yet we see 7880 kind of levels roughly holding and a move below 7920 designed to catch traders off rather than probe for an extension.
7880- 7920 spot remains the range to break for the coming week.
On the upside the Market will run into previous sellers immediately at 8045- 8065. We believe that if the market closes above 8065 convincingly we run higher to 8135 and even have the possibility of seeing the lows of the broken 2 week range near 8265 during the week.
BankNifty Spot :
Outlook :
(Large range between 17000- 18200 will keep the BN floating)
Post the big RBI event last week we had seen a lot of short addition in the BN. This addition was seen from levels of 18200 plus . However from Mon of this week gone by we saw shorts covering at the lows on every decline in our OrderFlow charts and the BankNifty had a further round of shortcovering on Friday especially in the last hour which meant the index was relatively unchanged week on week.
It’s highly likely than the BankNifty trades within the range established last week.
Our ref line for the week sits at 17790 and we believe that if the index moves to here sellers should come to push it down 17480 weekly POC and 17304 weekly VAL down.
If the index manages to scale past 17820 ( last week highs) it should move to clear the anomalies at 17960 as also the ones higher till 18260. 18260 is also the lows of the broken 2 week balance. This possibility only on a firm cross of last week’s highs.
The index confirms it’s weakness below POC 17480 and drops to 17304 and 17080 spot again.
Range is 17200 to 17800 with extensions possible upwards to 17955/18260 and down below to 17080/ 16750.