The Nifty tested 8621 on Monday’s open and found sellers who took it almost 300 points lower to 8337 when the MO hit oversold readings of -57 and -71 suggesting risk was increasing for sellers. That produced a 150 point rally on friday to reduce weekly losses. The weekly once again closed over the series vwap of 8446.
Last week’s view ” Early in the week the longs of last week will feel the pressure if 8535 VAL breaks,8505 would be our KRA on the weekly and a break of this pivot should take the index below last week’s lows and to the8425 support band when we watch for buyers in the OrderFlow charts.”
That post is up for review here : http://vtrender.com/nifty-bn-weekly-view-spot-for-10-aug-14-aug15/
Even though Friday’s pullback was significantly large at 150 points, OrderFlow was not convincing for the last 60 points of the rise as panicked shorts closed positions ( emotional covering of shorts) . We didn’t see new buyers in that auction and the possibility of the trade being visited lower to 8457 exists.
We would consider taking longs on the dip with sl below 8420 mentioned in last week’s notes.
Last week’s selling came 20 points lower than the anticipated 8640- 8660 zone and the chances of the coming week remaining inside are huge. We still expect 8620- 8640 to resist in the coming week.
The chart above shows a sideways going value in 6 weekly profiles now in a broad range of 8650- 8310. Whilst the possibility of a break of this emerging balance is not very high in the coming week, we remain alive to the possibility of a largish imbalance occurring from this composite balance. Last week’s imbalance break from the smallish weekly BN composite should be a reminder to most,on how these imbalances can quickly change scales.
Last week the move below the 18800 mark created the imbalance we were anticipating and the BN swiftly dived to 18034 in the week.The close on Friday brought it back to the edge of the broken balance where the weekly turned neutral again for the next 250- 300 points .
So early on Monday we would be watching the emerging OrderFlow for either 19070 in the first 2 sessions of the week or a trip down to 18510 to check buyer resolve.
Auction support below 18510 is at 18360 in the week. Above 19070 we could see a breakout starting with at least a 600 point move to the upside.