By Vishal Vasant Wagh
The Nifty has seen a sharp sell-off from the levels of 17992. There were three days sell-off of till 17345. Post that there was pullback till 17726 which also got sold off till 17166. It is the first indication of resistance in place near 18000 levels and any bounce below 18000 levels can be utilized to go short. On the last day of the week, the market witnessed a sell-off in closing hours. It is a clear indication of the current bear market rally has come to halt. As far as RSI(14) and 9 EMA the same is started moving below 70 levels. The super trend (8,2.25) is also shifted above the current bars. So, there are multiple indications that the bears may take charge very soon.
As commonly used moving averages(20 Bar, 50 Bar, 100 Bar & 200 Bar) suggest, there is support near 20 bar MA. The Nifty is sustaining above all MAs. The slope of 20 bar MA is flattening out and the differences between 20 and 50 bar started contracting. This is an additional signal that the Nifty may get some pressure on the higher side.
AAVAS (Aavas Financiers Ltd.): Buy
On a weekly chart, the stock has witnessed a sharp up move and the price has made a high of 3340 in the last week of January 2022 and then stock traded in lower highs and lower lows formation till 61.8 % Fibonacci Retracement level, which indicates healthy correction. In addition, in the second week of July, the price has given a breakout of the Falling Wedge pattern and shifted above last month’s highs, which indicates the price has made a strong base successfully and is ready for an up move.
Moreover, after a breakout of Falling Wedge, the price has been consolidating & builds up just below the 50 Exponential Moving Averages, which indicates bullish strength in AAVAS. Furthermore, the RSI (14) indicator has also sustained above 50 levels & an oscillator Stochastic RSI is also supportive for the long position with positive crossover. Hence, based on the above technical structure one can initiate a long position in AAVAS at CMP 2272, or a fall in the price to 2280 levels can be used as buying opportunity for the upside target of 2475. However, the bullish view will be negated if the price closes below the support level of 2230.
Persistent System: Sell
CMP: Rs 3,414
Persistent managed to retrace only 38.20% of the last downside move from the top of 4954 in May 2022. After that, it is resuming a downward trend. While moving downwards it has given a death cross in 50 and 20 EMA. Which is bearish. The slop of 50 EMA has flattish and 20 EMA is started sloping downwards. Both of these moving averages have converged and are ready to get diverge in the coming few days. The RSI (Relative Strength Index) is quoting 39.90 levels and it is below EMA. The REC with Nifty is also indicating bearishness. On the downside, levels of 3106 will act as support. Whereas, on the higher side 3620 should work as strong resistance. One should keep stopping above 3620 and sell the persistent future for the target of the recent low.
Dow Jones (31358)
The US markets ended the week with a dip red candle on Friday. The chances of another rate hike have increased. The drought in Europe and China is worsening the food inflation further. Technically Speaking, the Dow Jones(DJ) has created a lower low lower high price formation on the daily chart. The Super trend (8,3) is also signaling a strong reversal in the current bear market rally in DJ. The Relative Strength Index (RSI)(14,9) has quotes at 41.93. At the same time, the supply zone of 33711-34150 on the weekly chart has shown a strong resistance.
As far as largely followed moving averages (20 Bar, 50 Bar, 100 Bar & 200 Bar) are concerned, the exception of 200 Bar is sustaining below current market price and slop is flattish. Other are sustaining above the price and their slop are downward. The very short-term MA (20 Bar) sustains below short-term MA (50 Bar). But short-term MA is sustaining above mid-term MA (100 Bar). And finally, longer-term MA (200 Bar) is below the moving average. So, the longer-term upward trend is still intact but the short-term trend has reversed. In the coming few weeks, the recent low of 29653 may be tested.
Dollar Index (DXY) (109.609)
The DXY is moving in a long-term supply zone of 106.87-109.77. The said zone has successfully breached with a high of 109.907 but closes just in between the zone. The super trend (8,2.25) is positive and RSI(14,9) is holding above 70 levels. Any breakout above 109.77 will open gets for upside near 115 levels. As far as largely followed moving averages(20 Bar, 50 Bar, 100 Bar & 200 Bar) are concerned, prices are sustained above all and the differences between all the moving averages are expanding. It shows that the current trend is very strong and it has further leg upside.
Gold is in correction since August 2020. It has completed its bull move which started from the lows of 2018 i.e. $1160.37 to $2075 gaining nearly 78.87%. Since then it has managed to retrace 38.20% of the move and consolidate within the range of $1674 to $2075. Till there isn’t a strong breach to either side it is likely to move in the same range. Currently, it is in the lower part of the range. As per the logic of range, one can see some gains from here. As far as the time cycle is concerned, the gold has completed two years of correction post two years of the rally.
So, there are higher chances that it will bottom out sooner than later. Keep the current inflationary situation into consideration gold can be the best inflationary hedge. On moving averages (20 Bar, 50 Bar, 100 Bar & 200 Bar) front, the 100 bar and 200 Bar are sustaining below current market price and slop is flattish. Other are sustaining above the price and their slop are downward. The very short-term MA (20 Bar) sustains below short-term MA (50 Bar). But short-term MA is sustaining above mid-term MA (100 Bar). So, it indicates that the current sideways pattern may continue.
WTI Crudeoil ($87.06)
The crude oil started boiling from November last year till early March 2022. Within the said period it had gained more than double, from $62.46 to $129.42. Since March, it is in correction. Till the time it has retraced 61.80% of last rally. On moving averages (20 Bar, 50 Bar, 100 Bar & 200 Bar) front, the 100 bar and 200 Bar are sustaining below current market price and slop is flattish but tilted on the upward side. Other are sustaining above the price and their slop are downward. The very short-term MA (20 Bar) sustains above short-term MA (50 Bar). But their difference is contracting. So, it indicates that the current correction may continue but the longer-term trend is intact.
Indian Rupee Vs US Dollar (USDINR)
The USDINR has given breakout from the rounding bottom pattern the target for the breakout is equal to the depth of the rounding bottom added to the breakout area which comes to 81.96. As commonly used moving averages (20 Bar, 50 Bar, 100 Bar & 200 Bar) suggest, the prices are sustained above all MAs and the differences between all the moving averages are expanding. It shows that the current trend is very strong and it has further leg upside. The super trend is also indicating a bullish trend. RSI too quoting above 70.
Note: All the levels are given spot levels.
(Author Vishal Vasant Wagh is the Head Of Research at Bonanza Portfolio. The views expressed are the author’s own. Please consult your financial advisor before investing)