Nifty50 & Banknifty weekly analysis

Weekly Report
25th January 2021
Technical study & Recommendation;

Index Performance

NIFTY50-

Nifty50 started the week on a flat note and traded with extreme volatility on either side throughout the week. Nifty

closed at 14372 with a loss of 62 points on a weekly basis.

On the weekly chart, the index has formed a "Doji" candlestick formation indicating indecisiveness amongst market

participants regarding the direction. The index is moving in a Higher Top and Higher Bottom formation on the weekly

chart indicating positive bias. The chart pattern suggests that if Nifty crosses and sustains above 14600 levels it would

witness buying which would lead the index towards 14750-15000 levels. However, if the index breaks below the 14250 level.

it would witness selling which would take the index towards 14000-14350. Nifty is trading above 20 and 50 day

SMA's which is the important short term moving average, indicating positive bias in the short term. Nifty continues to

remain in an uptrend in the medium term, so buying on dips continues to be our preferred strategy. For the week, we

expect Nifty to trade in the range of 14800-14000 with mixed bias.

The weekly strength indicator RSI is moving upwards and is quoting above its reference line indicating positive bias.

However momentum oscillator Stochastic has turned negative from the overbought zone indicating a possible

consolidation or a down move in the near term.

BANK NIFTY-

Bank Nifty started the week on a flat note and witnessed a pullback rally in the initial half however selling pressure in

the second half dragged the index lower to end on a negative note. Bank Nifty closed at 31167 with a loss of 1080 points on

a weekly basis.

On the weekly chart, the index has formed a sizable bearish candle and closed below the previous week's low

indicating weakness on a short-term basis. The index is moving in a Higher Top and Higher Bottom formation on the

weekly chart indicating a sustained uptrend on long term charts. The chart pattern suggests that if Bank Nifty

breaks and sustains below 30900 levels it would witness selling which would lead the index towards 30600-29600

levels. However if the index crosses above 32150 level it would witness buying which would take the index towards

32800-33200. On the daily chart, Bank Nifty is now sustaining below its 20 days SMA indicating negative bias in

the short term. Bank Nifty continues to remain in an uptrend in the medium term, so buying on dips continues to

be our preferred strategy. For the week, we expect Bank Nifty to trade in the range of 32150-29600 with a

negative bias.

The weekly strength indicator RSI and momentum oscillator Stochastic have both turned negative and are below

their respective reference lines indicating negative bias.

The trend deciding level for the day is 31475 If BANKNIFTY trades above this level then we may witness a further

rally up to 31825-32485-32835 levels. However, if BANKNIFTY trades below 31475 levels then we may see some

profit booking initiating in the market, it may correct up to 30815-30460-29805 levels.

Stock Recommendation:

Nifty50 & Banknifty weekly report