AAKASHAYA PATRA WEEKLY MARKET OVERVIEW: 29.08.2020

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After a severe bout of under performance, Bank Nifty finally joined the Bull party; adding fuel to the fire. Even as the front line indices along with the Mid-Cap indices gained around 2%, the Bank Nifty outperformed by posting outstanding weekly gains of around 10%. Bank Nifty has always played a key role in previous Bull Market Rallies, and if the current Rally needs to go up any further, then Bank Nifty will have a key role to play. This week, Nifty overcame the strong Resistances provided by the weekly Trendline (11407) as well as Bearish Gap (11384-11536), and is now headed higher towards a Target of 12267, defined by the primary Reversal pattern of Bullish Cup & Handle. A Bearish Gap at 12012-12071 will test the Nifty before

achieving the above mentioned Target. Weekly Trendline (11407) which was overcome last week; will now act as Support

Technically Speaking :-

Sensex opened the week at 38566, made a high of 39579, low of 38545 and closed the week at 39467.Thus it closed the week with a gain of 1033 points. At the same time the Nifty opened the week at 11412,made a high of 11686, low of 11410 and closed the week at 11647. Thus the Nifty closed the week with a gain of 276 points.

On the daily charts, both the indices completed a Bullish Separating Lines Pattern which is a 2 day Bullish Continuation pattern. Interestingly, last six days have seen Bullish Separating Lines being formed 3 times, which is rare. This suggests that every alternate day, the Bears tried to stop the Rally but they were overpowered each time on the following day by the Bulls. On the weekly time frame, both Sensex and Nifty have formed a Big Opening White Body Marubuzo, which is acting as Bullish continuation Pattern. Thus Candlestick study indicates a Bullish Bias in the near term.

The Trading Range between Sensex 36800-38800 & Nifty 10800-11500, saw a Bullish breakout. The indices managed an upward break of  weekly Trendline (Sensex 38834 and Nifty 11407) as well as Bearish Gap at Sensex 39087-39423 and Nifty 11384-11536. The indices are now heading towards another strong Resistance in the form of Bearish Gap between Sensex 41037-41134 and Nifty 12012-12071. On the down side, the Weekly Trendline (Nifty 11407) which got breached last week will now act as Support.

Both Sensex and Nifty had completed a primary Reversal pattern in the form of Bullish Cup & Handle in June. The Target as per this pattern falls at Sensex 42136 and Nifty 12267. The indices are now moving higher towards achieving these Targets but before that they will be tested by Rising Trendline at Sensex 40371 and Nifty 11878 followed by the Bearish Gap mentioned above.

Both the indices continue to remain above the Short term average of 20dma (Sensex - 38332 and Nifty - 11315), Medium term average of 50dma (Sensex - 37269 and Nifty 10986) as well as the Long term average of 200dma (Sensex - 36780 and Nifty - 10819). Thus the Trend in the Short term, Medium Term as well as Long Term Time frame continues to remain Bullish.

MACD as well as Price ROC continues in Buy mode. RSI (71) suggests bullish momentum. Stochastic Oscillator %K (92) is above %D and hence in Buy mode. ADX (33) suggests UpTrend is still strong. Directional Indicators continue in Buy mode as +DI continues above -DI. MFI (78) suggests Positive Money Flow. OBV continues in Buy mode. Thus Oscillators are suggesting a Bullish bias.

Options data for September series indicate highest Call Open Interest at the strike of 12000. Highest Put build-up is at the strike of 11000. Thus Options data suggest a trading  range with Resistance @ 12000 & Support @ 11000.

 

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