Last week we put 8490 spot as our defining line for strength in the index in the weekly review done on Sunday. We also expected rotations down as long as 8305 spot held on the index. However the volumes generated by the exogenous event forced us to review mid week and we pointed out 8080 spot as support for the week. This week we continue to hold the bias done on the update of 02/06 whilst moving support down to 7970 for the coming week.We see 8260 resisting all upmoves this week.
Last week’s post can be reviewed here – http://vtrender.com/nifty-bn-weekly-view-spot-for-1-5-june15/
Outlook :
Sell on rise-
The break below the 2 week balance has made the structure weak in the Nifty. The higher volumes of the break lower and the elevated Implied Volatility of the Option chain ( Vix pointing to 19.20/20.83 again) would mean that all rises would be sold in the coming week. The structure suggests the first touch of the lower 2 week balance to be sold at 8255 levels for a target of 7970 during the week. If 8255 does not show then sell the move closer to 8210 all week.
Nifty Spot :
The Chart shows a High volume Node ( HVN) at 8130 which is the minimum level the bull has to cross early in the week.
Holding above 8130 the possibility of the index moving to 8210 is high.
The lows of last week are poor lows.
Hence staying below 8130 the possibility of a visit to year lows for a test is possible.
We believe this test should be done below 8130 but bulls should ensure that 7970 spot is not broken anytime during the week (possibility of break on last week’s volumes is less)
However the bull market is endangered if 7920 spot breaks on a weekly closing basis this week. We believe that if this 7920 breaks the index can drop to 7150 and 6476. ( Upto 7660 this month) . Caveat 7920 spot.
BankNifty spot :
Outlook :
Sell Rises.
Last 2 weeks we maintained 18200 spot as a good support on the index. However that was broken with huge volumes on RBI day and showed new shorts in the index. We maintained 17420 as a destination trade on the weekly based on those volumes in our weekly update released tuesday. The index hit 17470 lows on Thursday.
We see the same structure as the Nifty. Levels of 17960 and 18150 above in this index should be used to create or add to short positions. Sell rises.
In the chart above we see the same broken sell pattern as the Nifty chart.
High Volume Node has been created at 17670.
Staying below this HVN the index runs the risk of re-visiting year lows at 17246 and technical support of 17068 during the week.
Up above 17970 pointed above likely to resist all up moves and should be used as a point to re-short the index.