Nifty Daily, Weekly and Monthly Update

Candle Stick Analysis

Daily 28th & 29th Sept

• The daily candles for the last two days shows that the current round of sell off has bottomed out and found support at 9700 levels. 
• The expiry candle (on Thursday) formed a bullish spinning top (lower shadow of 48 points and a bullish real body of 33 points near the top with an upper shadow of 20 points) at the bottom of the sell off. This indicates that the selling pressure has eased and buying has emerged. However, this required a confirmation on the next day.
• Today, the market opened gap up and saw some selling pressure but managed to end at the high of yesterday. The candle was bearish as close was lower than open. Further the real body was at the lower range and another spinning top has formed. 
• The follow up confirmation day though closed above yesterday, and the psychological level of 9780 and above the 100 day SMA of 9778.

Weekly Candle Analysis

• The weekly candle shows a retracement of 492 points from the lifetime high two weeks back. While the Aug 7th week saw 389 points drop in 1 week from the then high of 10074, the current bearish phase lasted for two weeks and 492 points.
• The weekly picture shows that the recovery of 389 points took 5 weeks with bears putting up speed breaker after every bullish week. 
• And the break out of the previous high was utilised to create another two bearish weeks costing 492 points. 
• These two weeks of bearishness also completed a fib 23.6% retracement level of the current rally which began in January of this year. 
• A bullish candle next week is required to confirm the completion of the retracement. 

Monthly Candle Analysis

• A brief look at history before we look at the current month candle. 
• In 2015 there was a 23% retracement which was followed by a sideways range and further fall of 61% fib before the next rally started.
• The next upmove saw a correction of 50% between Sept to Dec 2016
• The current up move which started in Jan has seen a 23% correction in Aug and Sep. 
• The currently two months of bearish candle the real bodies seem to be inside the range of the huge bullish candle of July. Viewed that way, it seems like a consolidation of the July up move with attempts to break the July bullish run.
• The bulls are raising engine without adequate power and are getting the bearish treatment from the market as they are overstretching. 
• The two spinning top formation at the top is indicating the market digesting the new highs, or in mountaineering terminology, acclimatisation before the next climb.
• If the bulls have a solid backing , then index will see newer heights from this consolidation. 
• If not, the nifty will have to go to the lower level camps (say 9000 levels) to get stronger before they attempt to climb. 

Trend Analysis

• Daily Trend : Weak . Nifty trading below 5,10,20 and 50 SMA. Momentum has slowed down as Daily RSI has breached 40. 
• Weekly Trend : Strong. Nifty is trading below the 5 and 10 Week average but above 20, 50, 100 and 200 week averages indicating fairly strong trend on a weekly basis. Weekly momentum has turned sideways. RSI reading is 55.98 (Bullish) and sloping down (Bearish). This would indicate a sideways markets with lots of fist fights between the bulls and bears.
• Monthly Trend : Very Strong . Nifty is trading above all key moving averages and momentum is very strong with RSI reading at 66.56

Outlook for Oct 2017

• The daily trend has moved down from strong to weak, the weekly trend has moved from very strong to strong. So there has been a distinct slowing down of the momentum.
• The bigger time frame shows very strong trend, reinforcing the underlying structured bull run.
• So, the daily and weekly trend can be viewed as a consolidation/correction phase. 
• To understand what is happening let us look at the macro picture. 
• The economy fundamentals is under transition with concerns about GST, growth rate, employment, productivity, monsoon, Sept quarter results and so on. These are all implementation issues as the country moves into a new orbit, better governance and digital economy.
• The geo-political stability is constantly vitiated and globally there are big transitions taking place Brexit, Trump, N Korea, China slow down etc. etc.
• On the positive side, India is now the 7th largest economy growing at a healthy pace and moving towards better governance and digital economy. It has demography on its side with a resilient population. 
• Global equations are likely to change with new technologies (clean energy, big data etc.,), reduced dependency on oil, internet of things, data becoming the new oil and so on.  India's digital initiative will help it to stay ahead in this regard.
• The positive stories will take its time to reflect in the index. 
• As most of the market moves on daily and weekly basis are reactionary in nature, we can expect Oct month to be a sideways month. 
• Any negative trigger (GST Related, earnings related) could be used to try and pull the Nifty lower. And any positive trigger (stability in geo-politics) or an absence of negative news could be used to fuel bullish sentiment. 

NIFTY FIB BASED TARGETS

Interestingly, the target from current level seems a 1000 points on the upside or 1000 points downside for the next 3 fib levels. These targets are valid as long as the latest swing low of 9687 is intact. any break of this would require a recalculation.

UPSIDE  (Based on Monthly Chart)

1. 10169
2. 10502
3. 10772

DOWNSIDE (Based on Monthly Chart)

1. 9305
2. 9036
3. 8766

Stay Connected :

If you wish to participate in a discussion on this blog, please join the Facebook Group 

If you wish to learn more about my training programs you can find the details in this link.

If you wish to learn more about my thoughts on financial freedom, check this blog out. 

Remember, after all, Financial Freedom is a mindset first !!!

Thank you for reading the Blog and Stay Tuned in.

Disclaimer :

This blog is for educational and awareness purpose only. The views are intended for discussion and exchange of views rather than an expert opinion. This is not an recommendation to buy or sell or invest in the stock market and derivatives market. Kindly exercise caution and perform your own due diligence before investing in the market, after fully and clearly understanding the risks involved.