Technical analysis is based on three assumptions:
• The market discounts everything.
• Price moves in trends.
• History tends to repeat itself.
Nifty is currently trapped in a trading range from 11800 to 12050 levels around its previous lifetime high territory. It has formed DOJI candlestick pattern for the third consecutive week thus indicating indecisiveness in the market. The bulls and bears both are making their share of attempts to drag the index on either side.
As long as Nifty is not out of the tug of a war zone and a breakout from the stiff resistance of its previous lifetime high of 12103 levels is not achieved the trend will continue to remain sideways to negative with 11650-11700 levels acting as crucial support.
Relative strength index has formed negative divergence where the index chart has formed higher highs while the RSI has formed lower highs thus indicating that the immediate trend might work in the favour of the bears.
Taking a little cautious step won’t harm anyone as we all know precaution is better than cure. The 50 stock index is still making higher top – high bottom formation, thus if the bulls manage to drag the index on their side and push it above its resistance of 12103 levels then a possibility of an up move towards 12300 then 12450 levels cannot be ruled out.
BankNifty has been an outperformer compared to Nifty and is holding onto the positive stance for the last seven weeks. However, looking at the weekly candle is formed in the previous week we might see some profit booking as it witnessed stiff resistance at the higher levels and closed 360 points below its recent high of 31471 levels. The support for the index is now placed at 30500 then 30350 zones while on the upside resistance is at 31500 then 31800 levels. Now for Nifty to reclaim its positive momentum bank nifty has to support and continue with its positive trend.
Trading based on emotion (greed or fear) is the main reason why so many people are buying at market tops and selling at market bottoms. Emotional investing is often an exercise in bad market timing. Traders are requested to remain cautious and avoid taking a panic decision. Thus, maintaining a caution on their emotion.
Author: Miss.Ayushi Sushil Bagri Equity Research (Investment Services), 22nd November 2019