NIFTY OUTLOOK & OPTION CALL PUT TIPS FOR 19 AUG TO 23 AUG 2019

WEEKLY RESISTANCE FOR NIFTY: 11100, 11200, 11300

 PIVOT POINT: 11000

WEEKLY SUPPORT FOR NIFTY:  10900, 10800, 10700

WEEKLY CHART FOR NIFTY

DAILY RESISTANCE FOR NIFTY: 11075, 11150, 11225

PIVOT POINT:11000

DAILY SUPPORT FOR NIFTY :  10950, 11875, 10800

DAILY CHART FOR NIFTY

The market ended the three-day trading week on a lower note. The Indian financial market was shut on Monday and Thursday on accounts of Eid & Independence Day. After an extended weekend, on Tuesday the markets started the week marginally positive with hopes of further up move as the Reliance opened with a significant gap up post the various announcements in its AGM. However, the nifty witnessed selling pressure right from the start as the other index heavyweights along with the broader markets witnessed a sell-off. The selling pressure continued throughout the session and in spite of RIL ending with gains of 10%, the Nifty ended the session with a loss of above one and a half percent. On Wednesday following the favorable development with respect to US-China trade war, the Asian cues were positively placed and our market too started session on a positive note with a gap up of around 70 points. Although the index witnessed some choppiness in the first few minutes, the dip was bought into and then a sustained up move was seen during the session to register gains of about 1%. Markets ended flat on Friday dragged by uncertainty over announcement of any revival package by the government and weak global cues. Indices remained lackluster for better part of the day, only to turn volatile in the afternoon trading session. Nifty rises 18 points to 11047.

NIFTY: A STRONG SUPPORT WILL BE @ 10800; STRONG RESISTANCE LEVEL SEEN @11200

During the week, a pullback move was seen in the index after forming a reversal pattern from the low of 10782. The pullback move extended upto the ‘200 DMA’ on Friday which was placed around 11170-11200. This range also coincided with the ’20 DEMA’ which had acted as resistance in the previous pullback move seen in July. The mentioned resistance played its role and the index resumed its short term downtrend with all the sectoral indices except Energy (courtesy to Reliance) ended in the red. On the daily chart, it is seen as the resumption of the ‘Lower Top Lower Bottom’ formation wherein Friday’s high of 11181 is seen as the recent lower high. Hence, this becomes an important resistance now for short term trading. On the flipside, 10870 (78.6% retracement of recent pullback) followed by the range of 10830 - 10785 are seen as immediate supports for the index. The overall market breadth too was in favor of the declines as the broader markets witnessed carnage and hence, traders are advised to stay light on positions. the earnings season and key macroeconomic data now behind, some volatility can be expected in the near term in the absence of domestic cues. 

TECHNICALLY SPEAKING.

Fortunately, we managed to defend the 11000 mark on a weekly closing basis and the recovery started after precisely retesting some key moving averages and Fibonacci ratios. Firstly, index tested the 61.8% retracement level of the previous up move. This point was coincided with the ’89-EMA’ on weekly chart as well as 161% (Golden Ratio) of the recent small up move from 11108.30 to 12103.05. In addition, the ‘RSI-Smoothened’ oscillator on daily chart had reached the lowest level since October 15, 2018. All these key observations were hinting towards the possibility of some relief from the crucial junction of 10800. Hence, we avoided shorting and in fact kept focusing on some probable short covering candidates. The strategy played out well and we are back above 11000.