NIFTY OVERVIEW

NIFTY faced huge volatility in past few months where it managed to reach 52 week top and Bottom in matter for 2 months. I have analysed NIFTY on 2 time frames and given my views as below.

NIFTY – Daily Time-Frame

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Chart Reference - https://in.tradingview.com/chart/NIFTY/vBlvgjvV-Nifty-OVER-VIEW/

    Key Observations-

      1. Rising Wedge Breakdown -

A rising wedge Is formed when price consolidates between upward sloping support and resistance lines. If it forms during a downtrend, it could signal a continuation of down move. This same pattern is noticed in NIFTY and breakdown happened on 4^th of May 8, 2020. After breakdown NIFTY managed to remain below trend line support for last few days, confirming the pattern. 

      2. Fibonacci Retracements -

   NIFTY had retraced 50% from lows of 7511 till 9889. NIFTY couldn’t manage to break that crucial level and now it has started taking support at 38.2% retracements. 38.2% is seen as supply zone currently as its struggling there for last one month.  

  

NIFTY – Weekly Time-Frame

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      3. Relative Strength Index-

RSI is used to measure and evaluate overbought and oversold conditions in Stock price. RSI for NIFTY hit 12.30 when NIFTY was at 9590 and RSI of 25 when NIFTY was 7800, which was clear case of positive Divergence. RSI managed a rebound till 60 in matter of weeks and now currently settled at 48 for Daily time frame. The above weekly chart still suggests that NIFTY RSI is at 38 which is below its crucial support level of 40. This will act as crucial resistance for upward move.

  

        4.  Moving Average Convergence Divergence (MACD) - 

   It’s a trend following momentum indicator that  shows the relationship between 2 moving averages. On daily time frame, MACD is loosing strength as Signal Line is about to cross MACD line.

SUMMARY –
Keeping all the above points in mind. A Short Trade can be initiated in NIFTY with a risk reward of 3. A Short Trade can be initiated at current levels 9300, keeping a stop of 9600, April 29^th high. NIFTY is facing huge pressure at 38.2% retracement levels i.e (9300). A target zone can be set at 8800 to 8600 as seen in weekly chart. On 30^th April NIFTY made Island reversal too, which adds confirmation to current set up. Views will be negated if NIFTY breaks 9600.