Nifty weekly & sector technicals :: HDFC Securities

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Observation:
 Daily timeframe: We have witnessed an excellent uptrend this week, as Nifty showed a sharp upside rally of around
322 points.
 Nifty formed a high wave type candlestick pattern on Friday by gaining of around 74 points and moved into a new
all time high of around 8866 levels.
 The key chart pattern of upward sloping ascending channel came into play yesterday (green upward sloping parallel
trend lines), as Nifty reached the upper area of that channel around 8850-60 levels on Friday. This area is going to
act as a crucial hurdle for any from here.
 The market breadth continued to be week for the last few sessions, while Nifty forming new all time highs. Today’s
sharp upmove with all time high formation was in line with the weak AD ratio nearer to 1:2. This is not a healthy
sign for the current uptrend.
 Daily momentum oscillator like 34 period stochastic has reached the overbought region of around 98-100 levels and
is now showing a dip from that region.

Observation:

 Weekly Timeframe: After showing an alternative type of movement over the last five weeks, Nifty witnessed an

excellent upside move this week and closed near the week’s high.

 The gradual consolidation type upmove has been resulted into a sharp upside breakout this week and led to a

formation of new all time high around 8866 levels this week.

 Nifty as per weekly timeframe is now approaching a crucial overhead hurdle of upward sloping resistance line (blue

upward line, which is connected from the lower top of 7563-mid of May-14). This hurdle has placed around 8970-

9000 levels for next week. This area could be an important hurdle, as this area has offered reasonable declines in

the past.

 We observe a bullish sequence of higher tops and bottoms in Nifty as per weekly timeframe chart over the last

many months. This week saw Nifty break above the previous higher top of around 8626 levels-early Dec-14 and

made a new swing high. This pattern suggests that there is a possibility of the formation of new higher top around

9000 region by next week.

 Weekly momentum oscillator like 14 period RSI has started to form a negative divergence pattern (not yet

confirmed) with Nifty (higher high formation in Nifty and lower high formation in weekly RSI). Current reading of

weekly RSI is 70 and as per the theory of upper bullish range, the weekly RSI could move maximum up to 75-80

levels.

Summing up:

 The underlying trend of Nifty as per daily and weekly timeframe remains up, but the weak market breadth is

showing the concerns during its new all time high formations. The chart and momentum pattern and sentiments are

not favoring bulls to show significant upside rally from here.

 The further upside levels to be watched for next week around 8970-9000 levels, which are strong overhead hurdles

and the immediate support is placed around 8650 levels.