The afternoon session remained volatile and witnessed selling pressure near 34740 levels which is an intermediate supply zone.By Rohan Patil
NIFTY
Indian bourses on the monthly expiry started with a sell-off and breached 15550 levels on 28th July in the intraday chart. Later on, as the week progressed prices witnessed a V reversal rally on 29 & 30 July and recovered almost 300 points, and closed above 15800 levels. On the daily chart, prices have made hammer candlestick formation on 28th July near the lower band of the channel pattern, which indicates buyers were able to overcome the sellers.
Prices have again touched its lower band of the channel pattern and witnessed a solid recovery. On a previous couple of occasions, prices have shown the same tendency of reversal from its lower point of the pattern. The lower band of the pattern is also supported with 50- day exponentials moving average which is acting as a strong anchor point for the index.
In this kind of setup, we can expect the ongoing consolidation to end soon. The choppiness is expected to be there unless Nifty surpasses the levels of 16000 levels. Support for the index is placed near 15550 levels.
BANK NIFTY
Bank nifty started off with a gap-down opening and traded throughout the day in a range between 34450 to 34750. The afternoon session remained volatile and witnessed selling pressure near 34740 levels which is an intermediate supply zone.
Momentum oscillator daily RSI (14) reading is at 44.39 whereas weekly RSI (14) reading is well above 50. Normally in an uptrend, RSI tends to remain between 40 to 90 ranges with the 40-50 zone acting as a support. On the MACD (12, 26,9) front, the indicator shows weakness, and the MACD line has surpassed 0 lines on the downside. Daily ADX (14) which helps to know the strength of the trend was showing a reading of 16.45 and moving in an upward direction indicating that the index may see a faster trend in the coming days.
Major support is placed near 33940, breaching which we can witness further selling pressure till 33270 levels. On the upside, Major resistance is placed near 35700 to 36000 levels. A meaningful upside in bank nifty can be witnessed above 34800-35000 zone.
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JSWSTEEL has witnessed a falling wedge pattern breakout on the daily time frame and the prices are trading above its trend line resistance.
On the weekly chart prices have formed a rounding bottom basing formation and prices have also witnessed a downward sloping trend line breakout, which is bullish structure for the counter.
When we observe volume activity there has been above-average volume on the day of the breakout which confirms price volume breakout on the daily time frame. Momentum oscillator RSI (14) is reading above 55 levels with positive crossover on the daily scale, which indicates uptrend may resume soon. MACD indicator is reading above its centerline with positive crossover above its signal line.
During this recent throwback, the stock took support near 23.60 percent Fibonacci retracement which is placed near 672 levels on the weekly time frame.
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On the weekly time frame, we can see that the prices have moved out of a consolidation. On 28th July, prices gained momentum and broke out of a consolidation. This was backed by good volume buildup, indicating participation in the up move.
Prices have also witnessed a symmetrical triangle pattern breakout on the weekly chart and currently counter are sustained above its trend line support. On the indicator front, the RSI plotted on the weekly time can be seen above the 50- mark. It is moving higher towards the overbought levels, indicating the presence of bullish momentum as the prices move higher.
The key levels to watch for on the downside are 538, the multiple touch point level, followed by 520, the recent swing low.
CRUDE OIL
WTI CRUDE OIL has completed its one leg of lower low lower high pattern on the daily chart and has found support near the lower band of the rising channel pattern at $65.63 on 19th July.
WTI CRUDE OIL after forming a hammer bullish candlestick pattern in the previous week prices have continued to trade higher above the pattern and gained 2.50% and closed above $73 on the weekly chart. After forming that massive hammer during last week, it is obvious that the buyers are stepping in to pick this market up, and selling is all but impossible.
The big drawdown in crude came as refiners focused on pushing out as much gasoline as they could this summer to meet projected demand for the peak U.S. driving season. According to the EIA, refiners operated at 91.1 percent of capacity for the week to July 23, not far from highs seen during the pre-pandemic summer of 2019.
On the weekly chart, WTI CRUDE prices are trading above their upward rising trend line and continue to trade in a higher high higher low formation, which is technically a bullish structure for the Oil prices. The momentum oscillator RSI (14) is reading at 57 levels and has witnessed a sharp reversal from 40 levels on the daily time frame.
The near-term support for the WTI Crude Oil prices is placed near $70 & $68.50 levels (MCX 5350 & 5250 levels), where resistance is capped near $76.50 & $78 levels (MCX 5750 – 5825 levels).
Patil is a Technical Analyst with Bonanza Portfolio LTD.
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