Analysis of 'Nifty 50' for the week '16 January 2023 to 21 January 2023'

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The ‘Nifty 50’ is in downtrend since 01 December 2022, and we have been predicting that it will touch 17500, for last two weeks. Although, it did not hit the level of 17500 but has given a nice bearish move from the levels anticipated as entry zone, for a bearish trade, in the previous weeks’ analyses. Anyways, the new week is starting from 16 January 2023, so let’s have a look at the chart and data points, of the index, to forecast its price variation and direction for coming week.

NIFTY 50 Technical Analysis

The weekly chart of the index shows (check-out the video below) that the price is right-between both the exponential moving averages of the bearish cross (09 EMA above 21 EMA) setup. It also seems to be forming the second base of a symmetrical triangle pattern albeit it could be considered as valid pattern formation only if Nifty could secure this week’s low in the coming week. Moreover, there is also a falling wedge pattern formation, which is a bullish signal only if we witness a weekly close above the upper trendline of the pattern. It means market might be bullish above 17250-17260 zone.

If we look at the daily chart, we see that the bearish cross (09 EMA below 21 EMA) setup is intact and there has been another bearish cross formation using 21 DEMA and 50 DEMA. Furthermore, price is right-below the bearish trendline which can be a good level to initiate a sell trade albeit the 17770-17760 seems to be a strong support zone which might restrict further bearishness. However, if this Nifty-support gets broken, the next target will be 17511. So, it could be a good strategy to sell near 18090 with a stop loss at 18150-18170 zone, for a target of 17800-17770.

Let’s have a look at the hourly chart, it shows that the bullish cross (09EMA above 21EMA) has been formed but price is right-below the down-trendline which has been respected four times on hourly chart. Therefore, I presume that the index would fall again from these levels, violating the bullish cross formation; though vice-versa can also happen.

As per foregoing Nifty technical analysis on different timeframes, it is evident that the market is bearish until it remains below 18150-18200 zone. Which means we can plunge into a sell trade near 18100-18200, with a stop-loss at 18250-18270, for the first target of 17800-17700 and second target of 17511. On the other hand, if Nifty closes above 18150 on a daily chart, with good volumes, a bullish trade can be initiated with a stop loss below the previous day’s low.

NIFTY 50 Open Interest and FII, DII Data

As shown in the video below, there has been huge PUT writing at 17800-17900 levels and relatively lower CALL writing at all the levels above 18000, on Friday 13 January 2023. The open interest data chart also shows that 17800-17900 has become a good PUT-writers’-zone and 18000-18100 is weaker CALL-writers’-zone. Therefore, bullishness is more likely to come.

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The FII-DII data shows that foreign institutional investors have sold worth 9605.64 crores this week while domestic institutions bought worth 10042.08 crores. The final outcome of these figures shows that there has been net institutional buying of 436.44 crores this week which is also signaling for a sideways to bullish move.

Conclusion

We can see, in our above-mentioned analysis, that Nifty technical charts are giving bearish signal whereas option data and institutional figures are giving sideways to bullish signal. Therefore, we should avoid taking any trade until index is trading between 17900 and 18200. However, if there is an aggressiveness for trading, then take a bearish trade at 18090, with a stop-loss above 18200. If index breaks above 18200 with good volumes, then enter a bullish trade with a stop-loss below previous day’s low. Targets should be kept as mentioned in the technical analysis section.

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.