For the past 3 weeks, we have maintained a “buy on dips” approach and the index is up from 7700 to 8230. Last week’s report mentioned of a further short covering drive above 8084 t0 8223. The index hit 8232 in Friday trade. The Principles of Auction market Theory which we follow rigorously tell us that the current levels are not good now to build new long positions and it is best to wait for a dip to add to existing longs or build new ones, The overall Nifty structure now looks stable again above 7930 and we can see the index go to 8456 and a possible 8656 if we stay above 7900 in the next 2-3 months. But 8360 will continue to be a magnet in the next few months for price.
Last week the Nifty made it to the expected weekly target 1 of 8223, making a high of 8232 but did not show an appetite for target 2 of 8310 as selling started coming at higher levels. That post can be reviewed here- http://vtrender.com/nifty-bn-weekly-view-spot-for-05-oct-09-oct15/
The time frame for this report is weekly and levels we mention need to be seen in that timeframe only.
Nifty TPO chart:
In last week’s auction, Monday was a trend day up with a buying singles near 8000 showing new buyers interested in the index at that price. Wednesday was the start of the balance for the full IPM from RBI day or 7688 levels. Thursday and Friday confirmed that we are into Step 2 of the Steidlmayer 4 step process we track at Vtrender. More on the 4 steps at http://vtrender.com/steidlmayer-distribution-4/
The chart above shows the Nifty attempting a break above the recent 6 weekly profiles.The weekly made a P which confirms our stated view that it was a short covering rise.
For the week to come our first line of support for the Nifty spot will be 8084 levels. We saw strong buying come from these levels on our order flow charts and we believe the index will be supported higher on a price visit back to this zone. This 8084 finds a mention in last week’s report as well.
We will be looking to buy all dips to this point with SL below 7994 this week if OrderFlow shows us a Buyer interest if the price hits this point.
Banknifty TPO chart:
The BankNifty has an Open drive on Monday and another open drive on Tuesday which was in the opposite direction and downwards. The rest of the week was spent within the single print boundaries of these 2 drives.
Next week we have Infy and TCS reporting, which would put the focus on the entire IT pack. The BNF is the leader when it comes to comparing it’s moves at turning points with the Nifty, but when the comparison is sector v/s sector ( BN and IT) the BN tends to operate in the opposite direction to the IT pack. The range bound move of the BN in last week’s profile has a high chance of resolving in the coming week.
In the week to come, we see 17370 spot as a support in the index. Right below 17370 is a second line of support at 17240 levels. However, if 17240 does not show buyers then BN can drop down to 16744 levels.
Supply overhead will be at 17770 levels and if crossed then BN can target 18050 and 18150 quickly.
We have used quantitative analysis and the principles of Auction market Theory to arrive at our levels. For running updates of the daily and weekly moves and to join our community visit – Vtrender Trading Room