NIFTY remained under pressure in the previous week amid extreme volatility. Although it managed to recover sharply on Friday after hitting a low of 8555, it couldn’t sustain above the psychological resistance of 10000. Nifty has formed a hammer candlestick pattern on the weekly scale. A hammer candlestick pattern is considered as a bullish reversal pattern and it is mainly occurring at the bottom of the trend. Now, we might see some pullback towards 10500 and above that, it may move towards 10900. If we take the Fibonacci retracement of the entire recent fall from the top, then the 50% retracement is coming around 10500 which will now act as immediate resistance. The immediate support is now placed at 9500 and below that index may again slip towards 8800 levels.
The momentum indicator “RSI” has shown signs of reversal from its deeply oversold territory, which hints of some pullback but the index is not out of woods yet. The sentiment indicator “INDIAVIX” surged approximately 100% this week and ended at a 10-year high of 51 levels, which is a major concern for the bull and it has to cool down below 30 levels to give comfort to the bulls.
BANKNIFTY traded in line with Nifty in the previous week and also formed a hammer candlestick pattern on a weekly scale. However, It ended tad below its 200-DMA on a weekly scale which is placed at 25190. The next resistance is placed at 26500 levels. Immediate support is pegged at 24000 and below that, it may drift to 22500 levels.
Author: Mr.Nilesh Ramesh Jain, Derivative and Technical Analyst (Investment Services), 14th March 2020