Study of NIFTY50 for the Fifty-First week of 2022

In our last week’s study, we had analyzed that the NIFTY can go to either of the directions only if it broke above or below 18664.70 and 18410 respectively. It had first broken the lower level and given a down move of 65 points but recovered from there to break the high of 09 December 2022 and giving a reward of 32 points only which was not practically possible to capture. After that it again broke the lower level on 15 December 2022 and closed at 18269 after making a low of 18255.15 which means index gave a reward of 155 point that was quite possible to capture. See the daily chart below.

Picture 2.1

NIFTY 50 Technical Analysis

While doing technical study of Nifty 50, I check the index positioning based on the exponential moving averages 9,21, and 50 EMAs, RSI reading and chart pattern formation if any. Let’s start with moving averages, we can see that the index had closed below 9 and 21 EMAs on daily charts but it is still above 50 EMA, so there is a possibility of an up-move from 50 EMA which is placed at 18180, because index might find support at 50 EMA. (see picture 2.1)

However, we can see that the same EMA combination has formed a perfect bearish cross on the hourly chart (see picture 2.2) but because price is quite far from all the EMA lines, it might come to retest any or all of them. Our Nifty technical analysis on hourly chart shows that 9,21 and 50 EMAs are currently at 18350, 18435 and 18505 respectively and therefore we may see an up move of up to 18505 and then again, a fall should start. After looking at the discussed setup, I presume that index should make a high of up to 18450-18500 on Monday, 19 December 2022, and then should fall up to 18180-18150 and rise again from there and if it breaks the level of 18100, then there should be a further fall of up to 17400 which is 200DEMA (see picture 2.1).

Picture 2.2

Let’s now have a look at the RSI readings, The Nifty chart shows that daily RSI (7-length) of the index is at a level of 30 which shows weakness but the hourly RSI (7-length) is showing a bullish divergence against (see picture 2.2) the prices which indicates that price should retest 21 and 50 EMAs as on hourly chart and then might show a further fall based on the EMA setups on the daily chart.

NIFTY 50 Open Interest and FII, DII Data

The OI change data, in the figure below, shows that there has been a good call writing on Friday, 16 December 2022, and comparatively much lesser put writing. Also, the open interest data, in the figure below, shows that strong call writers’ zone is 18400-18500 price-zone and strong put writers’ zone is 18200-18100 price-zone. Which means the outcome of our study of OI data is in-line with the outcome of our study of technical setup.

Picture 2.3

The FII DII Data shows that foreign institutional investors have sold the shares worth of ₹1832.91 crores and domestic institutions have bought the securities of worth ₹3462.22 crores last week. So, the net institutional buying of ₹1629.31 crores has happened last week which means DIIs might not let the market fall much like they have been doing last entire year.

Conclusion

After studying all the data and charts, it seems that index will retest a level of 18450-18500 and fall again to make a low of 18180, and will start the up move again, but because Friday-fall came with higher volume than the daily volume of last eight sessions therefore if Nifty breaks the level of 18100 with similar or higher volumes, then it might make a low of 17400 followed by 17800.

Note: I have just shared what I studied. I am not sure if I’ll trade next week or not. Also, the Data, used for analysis, has been taken from different sources on internet and I am not a SEBI authorized analyst, therefore verify the data and seek experts’ opinion before taking any trade.