After a strong uptrend from the past several months, we have seen continuous profit booking in the last six trading sessions that dragged the benchmark index nifty lower by 737 points(-5%) on a weekly scale. Long bearish candle after indecision candles on the top suggests a trend reversal or at least a meaningful medium-term correction in nifty.
The market continues to remain volatile as we approach Budget-2021 with India VIX crossing its 25 marks and up 13% on a closing basis on a weekly timeframe implying nervousness in markets and volatility to remain around the event which will translate to a wider trading range.
As per weekly charts, 13100-13050(acc. to technicals) and 13000 being a psychological level forms good support. Resistance levels come around 14400 and 14500. Break above 14500 might trigger a fresh upside.
As per the daily timeframe nifty has broken a crucial support zone of 13820-13750. It took support from the 13600 levels and gave closing above it. Move below 13600 might trigger fresh selling till around 13430 and 13300-13250 levels as of now. On the upside, 13850-13870 might act as minor resistance. Break above 14000-14050 zone can take nifty up to 14230-14280 levels which can act as a strong resistance for the current series. On a smaller timeframe sustaining above 13800 can accelerate nifty to 14000 levels.
Nifty saw a Short buildup with price correcting and futures OI increasing by 6% implying the downside remains open for nifty.
Options data indicate 14000 strikes as resistance for immediate expiry above which we can expect a short-covering move. While the 13800 strike holds maximum put OI as well as the maximum change in open interest on the positive side for immediate expiry. Suggesting a weekly range of 200 points which can easily be breached due to volatility and any triggers from the upcoming budget -2021.
A cautious approach is advised for the week ahead.
Hope the analysis will help you in upcoming trading sessions.