Nifty Analysis for the week starting from 13 February 2023

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‘Nifty 50’ traded sideways last week and therefore formed a Doji candle on the weekly chart. We, also, had written in our last week’s article that we might not see any directional move in the upcoming week, and therefore we were not in favour of taking any trade on the index. Confirming our prediction, market traded sideways and didn’t give any trade signal.

Let’s delve into the charts and data of the index to get some idea about its movements in the coming week.

NIFTY 50 Technical Analysis

As mentioned above, the weekly chart shows that the Doji kind of candle has been formed. Also, the bullish cross (09EMA above 21EMA) is intact and price is right at the lower positioned EMA. It means the weekly chart is still giving confusing signal.

Looking at the daily chart, we see that the bearish cross (09EMA below 21EMA) is intact but price closed below the upper positioned EMA. We are getting the confusing signal on the daily nifty chart as well but if you see little carefully, you’ll find a double bottom pattern formation at 200DEMA. One more thing is visible here, and that is the retest of the double bottom pattern (check the video below). Along with the 200DEMA led support, the retest of the double bottom pattern formation is indicating towards bullishness. However, we should not take a bullish trade until Nifty holds above 18000 because 50DEMA near 17970 may act as a resistance and push the price downwards. This level is also a resistance, formed by the upper line of the downtrend channel; therefore, we should enter a bullish trade only if index holds above this level for a day or so.

Let’s have a look at the hourly chart, Bullish cross (09EMA above 21EMA) is intact and price is lying between both EMAs which means we are not getting any clear signal on hourly chart as well.

So, the above mentioned nifty technical analysis suggests us not to take any trade until price either holds above 18000 or declines from the current level. If index holds above 18000, take a bullish trade above the high of the day with a stop loss below previous day’s low. On the other hand, if it forms a red candle on the daily chart from current levels (near 17800-17900), take a bearish trade with a stop loss above the previous day’s high.

NIFTY 50 Options’ Open Interest and FII-DII Data

Upon looking at the Friday’s, the 10 February 2023, OI addition chart, it is visible that the huge PUT addition has happened at 17800 albeit there has also been a handsome call addition at 17800, 17900, and 18000. Looking at outstanding open interest data, we find that there is exceptional call writing at 18000 along with highest open interest at the PUT of 17800 strike. This data indicates towards a sideways move in the range of 17800 and 18000. However, 18000 seems to be an important zone for a trade entry.

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The institutional data shows that FIIs have sold worth 3201.63 crores last week while the DIIs have bought 2287.48 crores. It means there has been a net selling of 914.15 crores which is a bearish sign.  

Conclusion

If you look at our findings of chart study and options’ data study, you’ll see that 18000 is a good zone for a bullish entry if Nifty holds above 18000, but don’t forget to place a stop loss below previous day’s low. Also, it is the right place for a bearish entry, if index forms a bearish candle near 17900, with an SL above previous day’s high.

Disclaimer: 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.