Last week's Observations : http://vtrender.com/content/composites-august
The Notes taken are still valid :
We expect resistance to build in between 5750- 5779 and shorts can be re added here if price makes it back to this point. All levels are Aug Future.
Holding above 9850 the BNF can make a move to the top of the single print at 10080 and then reach 10297 from the profile dated 31st July.
The bankNifty failed above the single prints of 10080 and had a bigger fall on friday.
Let's profile the charts for the coming week :
We tracked the composite balance on the 7th of August and anticipated a move up towards the old balance from 31st July ( left of chart).
Markets have a simple movement if you want to eliminate all noise and the simple motion is from Balance to Imbalance and back to Balance.
Balance gets represented by profiles which look like the alphabet D. The 7th and the 14 th of August are examples of balanced profiles.
Imbalance on the other hand can be tracked through single prints or alphabets in charts above which do not have alphabets next to it. Imbalance creates vertical moves in the market and often end near a balanced profile ( either end).
We also noted in the last post that most balanced profiles get a visit in the not-to-distant future.
Back to the chart above, the current profile from friday has single prints at the top and has started from a small balance from the 14th of Aug.
It also went through the composite balance of 7th Aug, finishing at the extreme end.
For Mondays' trading the lows of friday and the region around 5484 would be watched for continuity.
In trend days we look for a re-trace of 33.3% from the lows(or the highs) to see if the trend day profile is still dominant.
This level would be 5570 August Future. Shorts should lighten up or take gains from friday above this point as the previous day's profile would get negated and the market would make it';s intentions known for a 5500- 5800 range bound play.
However holding 5570 F ( upto 5588 to account for excess) the trend favors the seller and 5429 and 5341 Aug F are immediate levels for support to hold during the week.
A quick medium time frame analysis of the Nifty spot projects a target of 5156 Spot if 5444- 5420 breaks during this week. 5444 is approximately the gap support zone when the present government under a new FM had announced some reform measures. A falling INR has been the reason for the latest slump and it would make sense to continue tracking the USDINR along with a Nifty chart during this week.
The banknifty has a weaker rise than the Nifty during the early part of last week and fell harder on friday.
The immediate objective of 9415 below 9720 was met on friday itself . A move below 9400 will bring 9215 and 9022 Aug F during this week.
The trend day 1/3 rd region for the move down of friday is at 9603 but only a move above 9720 can bring a pause to further selling.
Longer term trend remains down below 10800 and the immediate target remains the region around 9000 on the spot.
Both the NF and the BNF were rejected at their falling vwaps on friday and a series closing at the lower end near 5340 and 9160 is a real possibility.