AAKASHAYA PATRA WEEKLY MARKET OVERVIEW:15.08.2020

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After a long time, the Bears seem to be making a comeback of sorts, which was visible in the late afternoon fall on Friday. The Bulls seem exhausted after witnessing a sharp vertical rise of over 51% in the Nifty. After dropping from a high of 86 to a low of 16, the Volatility Index, India VIX,seems to have bottomed out and is making a comeback. Repeated failure of Nifty to cross the Weekly Rising Trendline (11395), which is also the upper boundary of the Trading Range (10850-11400), is a cause of concern for the Bulls. Smaller Rising Wedge has been completed and the fall will now accentuate if Nifty closes below the steep Rising Trendline at 11155. Once again Mid & Small Cap Indices have outperformed the Nifty for the past week, and looks set to continue with their out-performance.

 Technically Speaking :- 

Sensex opened the week at 38168, made a high of 38556, low of 37654 and closed the week at 37877. Thus it closed the week with a loss of 163 points. At the same time the Nifty opened the week at 11270, made a high of 11373, low of 11111 and closed the week at 11178. Thus the Nifty closed the week with a loss of 36 points.

On the daily charts, both the indices have formed a Big Black body candle after forming neutral formations for past seven trading sessions. As for the weekly timeframe, both the indices have formed a small Black body Spinning Top. Thus Candlestick pattern suggests a Bearish bias in the near term.

The indices are in a Trading Range between Sensex 36900 to 38700 and Nifty 10850-11400. The Upper Boundary of this Trading Range is defined by the historical Weekly Trendline (Sensex 38719 and Nifty 11395) obtained by joining the critical bottoms made in October 2018 and August 2019. Repeated failure to cross the Upper Boundary will lead the indices to test the Lower Boundary which is defined by the critical 200dma (Sensex 36857 and Nifty 10842). A break of upper boundary will lead the Nifty to Resistance offered by daily Bearish Gap at 11384-11536. A break of lower boundary defined by 200dma, can lead the indices down to test the higher bottom at Sensex 35877 and Nifty 10562.

The daily steep Trendline (Sensex 37630 and Nifty 11155) which continues to support the Market,since the start of this current upward Rally, is also a part of Rising Wedge pattern. Closing below this Trendline will complete the Bearish Rising Wedge pattern and the Targets will be at Sensex 35332 and Nifty 10341. Further Bearishness can lead to lower Targets of Sensex 33823 and Nifty 10072. Only a Close above Sensex 38617 and Nifty 11373 will negate the Bearish Pattern.

Both the indices tested and have just managed to close above the Short term average of 20dma (Sensex - 37941 and Nifty - 11171). But both the indices continue to remain above the Medium term average of 50dma (Sensex - 36309 and Nifty 10701) as well as the Long term average of 200dma (Sensex - 36857 and Nifty - 10842). Thus the Trend in the Short term Timeframe is still Upwards, whereas the Trend in the Medium term as well as Long term Timeframe also continues to be Bullish.

MACD as well as Price ROC continue in Sell mode. RSI (57) has dropped but still suggests diminishing bullish momentum. Stochastic Oscillator %K (77) is below %D and hence in Sell mode.ADX (36) suggests UpTrend still has strength. Directional Indicators continue in Buy mode as +DI continues above -DI. MFI (58) suggests Positive Money Flow. OBV continues in Buy mode. Negative Divergence of the first order observed in MACD, RSI, Stochastic Oscillator and MFI is a cause of concern. Thus Oscillators are suggesting a Bearish bias.

Options data for August series indicate highest Call Open Interest at the strike of 11500. Highest Put build-up is at the strike of 11000. Thus Options data suggest a short term trading range with Resistance @ 11500 & Support @ 11000.

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