Technicals: Nifty forms bullish engulfing pattern on weekly chart 

By: | Published: July 29, 2016 5:38 PM

Nifty on the weekly chart has made a bullish engulfing pattern which indicates the current rally being dominated by a bull.

As per chart structure Nifty closed below its last year swing top of july which is at 8,660 level. so in near term the immediate resistance on closing basis in spot comes at 8,660 which needs to be taken off. (Reuters)As per chart structure Nifty closed below its last year swing top of july which is at 8,660 level. so in near term the immediate resistance on closing basis in spot comes at 8,660 which needs to be taken off. (Reuters)

Nifty on the weekly chart has made a bullish engulfing pattern which indicates the current rally being dominated by a bull. The important aspect of the pattern comes with absorbing of F&O expiry and other global events during the course of time. As the month ends, we see positive bullish long white candlestick on monthly chart as well. So we have multiple confirmations in near term to clearly confirm the trend to be bullish in near term.

The bullish engulfing pattern on weekly chart is seen as prevailing of the existing trend post some correction on the chart. It is characterised by previous candle being red while the current green candle engulfs and covers the red candle, it also comes with a gap down opening which we can see in Nifty weekly close.

As per chart structure Nifty closed below its last year swing top of july which is at 8,660 level. so in near term the immediate resistance on closing basis in spot comes at 8,660 which needs to be taken off. A close above this resistance will see next level as 8,710-8,800. Initially support comes at 8,550 to 8,490 which has acted as change of polarity in previous trading sessions and may be seen as dips utilized by bulls in near term.

Reviewing the OI data post expiry suggest a trading shift from 8,300 – 8,600 to a new range of 8,500 to 9,000 on upside with highest OI concentration. Higher rollover statistics in Index and Stocks also suggest the same for August series. Any correction in near term will be healthy and will be used for weak hands to be shaken out while smart money being made with buy on dips strategy.

For coming month we may see pressure in PSU banks due to earnings while private banks may outperform, auto ancillary and refineries may see buying momentum. Metals and Media may shine in coming month.

(The author is CEO at Epic Research)

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