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We had a sharp turnaround in the markets, this past week and it was a trend down weekly profile and a Double Distribution.Even though we formed a balance on Thursday and all of Friday, the nature of the profile suggests a continuation of the selling seen with 2015 lows in danger of being broken and all rises to roughly 7760- 7770 F to meet renewed sellers.
The USDINR is poised near 67 and attempting a break higher and on to 67.62/ 67.82 and the vix is in an uptrend above 16 levels in the current week and above 19.55 likely to visit 21.35 and 22.80 with a possibility of 24.20 again.
The higher vix is a pointer to more puts being bought and in the coming week, we watch vix for the same.
Technically through the chart above we are looking for a break from the lower part of the double distribution for a continuation lower and the volumes project 7470 F as the probe target.
If we get there and the OrderFlow does not show Greens, then the larger monthly/ yearly timeframe can come in to liquidate and push the index lower to 7260/ 7160 kind of levels. Initially though we would be content tracking the auction around the 7470 mark, if we do manage to go down.
On upsides the gap above is excess in Market Profile and Wednesdays sellers are holding the region around 7740- 7760 being the lows of that session. We believe that the first touch of this zone, if it comes about in the coming week, will be used by market particpants to add back short futures.
Roughly looking at a 7470- 7740 kind of range in the upcoming week.
BankNifty :
The BankNifty structure is the same as the Nifty chart posted above with the same type of distribution.
The Sept 2015 Lows around 15800 are the last support in the BN along with last week’s 16033. This zone is crucial to the next leg of the auction and a dip lower can send the MT auction to the next leg and 1000 points lower in weeks.
The structure shows that any rise to 16500-16600 F is a new short opportunity in the BNF. Also an immediate dip lower than Thursday’s 16058 will send it down to 15800 F. The view below 15800 points to a drop of 500 points immediately within the week to 15300 levels.
Our expected range of movement for the week is 15800- 16500 F.