At What Price Level Will the Nifty and Bank Nifty Bounce Back?

  • by THO
  • 7 days ago
  • news
  • 1

In the last days of October, I had penned two articles in which I had called a top in the indexes. This analysis of mine turned out to be correct as for the past few weeks, the headline indexes have been on a decline. Thus, it is imperative for us to look at the probability of a reversal in the coming sessions. Hence, in this article, I shall look at the November futures so as to determine which support levels traders ought to track. Plus, if we were to have a bounce-back, then which resistance levels need to be considered as targets. This is as we could have an actual reversal or a simple dead cat bounce.
Coming to the , the index has hit a rough patch of late as it has fallen by roughly 5.5% from the high it made. However, this week will be important for the index as it is approaching key support zones plus the Nifty has a lot going on for it in the news front. On one hand, is positive news that the controversial farm laws are being repealed by the ruling government. It is obvious that this is being done due to the state elections being on the horizon and the BJP does not want to be the side chick. However, on the other side is the Reliance (NS:) news, which gives off a bearish stench that will affect the sentiment of the index. Thus, owing to all this, I expect the index to breach the current support at Rs. 17,640. The two supports I shall eye for a bullish reversal are at Rs. 17,490 and Rs. 17,400. This is as there is a confluence of support zones being formed within this range. Moreover, if it were to have a reversal, then the resistance zone to watch is between Rs. 17,750 and Rs. 17,800.
Whilst analyzing the Bank Nifty’s charts and data, things look a tad bit better as the urgency of the descent has reduced. This is most probably due to the index falling by 10% from its high of Rs. 41,821. However, owing to how weak the Nifty is looking, the probability of last week’s low being breached seems rather high. Thus, the support I will focus on is between Rs 36,900 and Rs 36,650. If this were to break, then it will open the index to one hell of a fall. But if we were to have a reversal at the support zone, then the resistance levels I will aim for are at Rs 37,640 and at Rs 38,400.
Overall, looking for a reversal is quite a complex task as the market can throw a curveball at any point. However, the data suggests that these support zones are the most probable points for a build-up in bullish strength. Therefore, I would recommend to traders looking for a reversal trade to initially trading fewer lots. This is until the support gets confirmation in the 3 and 4-hour charts of the indexes. Lastly, as usual, I will keep posting updates about the indexes and various stocks on my Twitter (NYSE:) handle as the scenario changes. 
Disclaimer: The investments discussed by Sandeep Singh Ahluwalia may not be suitable for all investors. Thus, you must trust your analysis and judgment before making investment decisions. The report provided is for informational purposes only and should not be interpreted as a proposition to buy or sell any securities.

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