Three Year Parallel Channel of Nifty with Multiple indicators.
We have tried to draw a Three Year Parallel Channel of Nifty with Multiple indicators. We will try to understand what is happening as per each indicator and try to get the jist of moves that may occur with a medium to long term perspective.
Indicator 1) Parallel Channel: The parallel channel indicates that after hitting the channel top at 26277 the Nifty is receding and is on a search of it's bottom from where it can launch forward again. That is the case when every time Nifty has it a channel top as you can see in the chart. The Future Channel Top once Nifty picks up the next Bull run seems to be around 29497 as per the parallel channel. Mid channel support of the parallel channel is around 23500 zone which can support Nifty. If we get a weekly closing below 23500 this level will become a resistance. In such a scenario of weekly closing below 23500 Channel bottom seems to be near 21296.
Indicator 2) Fibonacci Retracement: Fibonacci retracement suggests a bottom near 23263. If this level is broken there is a possibility of Nifty falling to the next fibonacci supports will be at 22506 and 21577. Once the Bull run begins the next resistance levels as per Fibonacci seem to be at 24725, 26777 (Previous high), 27162 and finally 28331.
Indicator 3) Bollinger Band: Support with respect to lower width of Bollinger Band seems to be near 23340. Mid Bollinger band resistance seems to be near 24660 and Bollinger band upper width resistances seems to be near 25981.
Indicator 4) RSI or the Relative Strength Index: RSI currently is at 44.41 and going downwards showing weakness. The RSI support can be found in the zone of 40, 38 or 36. Usually When RSI is below 30 the stock or index is considered oversold and when the stock or index RSI is above 70 it is considered overbought. RSI Below 20 is extremely oversold zone and RSI above 80 is considered extremely overbought.
Indicator 5) MACD or Moving Average Convergence and Divergence: MACD is a combination of Moving averages lines which tend to indicate direction in which stock or index will move and histograms indicate strength or weakness of a rally. As per MACD Nifty right now is in extreme Bear grip and will take a little time to recover. When the Blue line will start moving upwards and when it might cross the red line and continue to move upwards it can be considered as Nifty will come back to Bull Zone. Colour of histograms at that time will also start going Dark Green or light Green.
Indicator 6) 50 and 200 weeks EMA or the Mother and Father line: I have designed a theory called Mother, Father and Small Child Theory. As per this theory the movement of index or a stock in the chart is like a movement of a 3 year old child when it goes to a garden. The movement of 50 EMA is like movement of the mother and movement of the 200 EMA is like movement of a Father of that child. To know more about this theory or other indicators mentioned earlier you need to read my book THE HAPPY CANDLES WAY TO WEALTH CREATION. This book is available in Amazon in paperback or Kindle version. It is one of the Highest rated book in the category. Have a look at that book it will help you immensely in your wealth creation journey. Now as per this theory the Nifty right now is at 23587. 50 Weeks EMA is at 23403. 200 Weeks EMA is at 19335. as the Nifty is above these levels both these levels will work as a great support to Nifty and can help Nifty from falling further.
Conclusion: Nifty is approaching multiple supports from where it has potential to turnaround. Mid channel support is around 23500, 50 Weeks EMA support or the Mother line is at 23403. 23340 is the Bollinger band lower band width support. Fibonacci support is at 23263. We can see a turnaround mostly from either of these three supports. If these supports are broken by chance (looks less likely but you can never say never) then the next supports will be at 22507, 21296 or worst case scenario as of now looks like 19335. On the upper side resistances seem to be at 24660 Fibonacci mid resistance, 24725 is the Fibonacci resistance, 25981 is Bollinger band upper width resistance and 26277 is the Fibonacci resistnace which also the previous high of Nifty. Once this zone is crossed in a long term we can reach the targets of 27162 Fibonacci resistance, 28331 Fibonacci golden ratio resistnace and 29497 which is the approximate nex channel top. (This is the Medium to Long term outlook of Nifty).
This is how you can analyse any index or a stock using the 6 indicators mentioned in the writeup. I give top most priority to these 6 indicators in my analysis.
Disclaimer: Disclaimer: The above information is provided for educational purpose, analysis and paper trading only. Please don't treat this as a buy or sell recommendation for the stock. We do not guarantee any success in highly volatile market or otherwise. Stock market investment is subject to market risks which include global and regional risks. We will not be responsible for any Profit or loss that may occur due to any financial decision taken based on any data provided in this message.
Indicator 1) Parallel Channel: The parallel channel indicates that after hitting the channel top at 26277 the Nifty is receding and is on a search of it's bottom from where it can launch forward again. That is the case when every time Nifty has it a channel top as you can see in the chart. The Future Channel Top once Nifty picks up the next Bull run seems to be around 29497 as per the parallel channel. Mid channel support of the parallel channel is around 23500 zone which can support Nifty. If we get a weekly closing below 23500 this level will become a resistance. In such a scenario of weekly closing below 23500 Channel bottom seems to be near 21296.
Indicator 2) Fibonacci Retracement: Fibonacci retracement suggests a bottom near 23263. If this level is broken there is a possibility of Nifty falling to the next fibonacci supports will be at 22506 and 21577. Once the Bull run begins the next resistance levels as per Fibonacci seem to be at 24725, 26777 (Previous high), 27162 and finally 28331.
Indicator 3) Bollinger Band: Support with respect to lower width of Bollinger Band seems to be near 23340. Mid Bollinger band resistance seems to be near 24660 and Bollinger band upper width resistances seems to be near 25981.
Indicator 4) RSI or the Relative Strength Index: RSI currently is at 44.41 and going downwards showing weakness. The RSI support can be found in the zone of 40, 38 or 36. Usually When RSI is below 30 the stock or index is considered oversold and when the stock or index RSI is above 70 it is considered overbought. RSI Below 20 is extremely oversold zone and RSI above 80 is considered extremely overbought.
Indicator 5) MACD or Moving Average Convergence and Divergence: MACD is a combination of Moving averages lines which tend to indicate direction in which stock or index will move and histograms indicate strength or weakness of a rally. As per MACD Nifty right now is in extreme Bear grip and will take a little time to recover. When the Blue line will start moving upwards and when it might cross the red line and continue to move upwards it can be considered as Nifty will come back to Bull Zone. Colour of histograms at that time will also start going Dark Green or light Green.
Indicator 6) 50 and 200 weeks EMA or the Mother and Father line: I have designed a theory called Mother, Father and Small Child Theory. As per this theory the movement of index or a stock in the chart is like a movement of a 3 year old child when it goes to a garden. The movement of 50 EMA is like movement of the mother and movement of the 200 EMA is like movement of a Father of that child. To know more about this theory or other indicators mentioned earlier you need to read my book THE HAPPY CANDLES WAY TO WEALTH CREATION. This book is available in Amazon in paperback or Kindle version. It is one of the Highest rated book in the category. Have a look at that book it will help you immensely in your wealth creation journey. Now as per this theory the Nifty right now is at 23587. 50 Weeks EMA is at 23403. 200 Weeks EMA is at 19335. as the Nifty is above these levels both these levels will work as a great support to Nifty and can help Nifty from falling further.
Conclusion: Nifty is approaching multiple supports from where it has potential to turnaround. Mid channel support is around 23500, 50 Weeks EMA support or the Mother line is at 23403. 23340 is the Bollinger band lower band width support. Fibonacci support is at 23263. We can see a turnaround mostly from either of these three supports. If these supports are broken by chance (looks less likely but you can never say never) then the next supports will be at 22507, 21296 or worst case scenario as of now looks like 19335. On the upper side resistances seem to be at 24660 Fibonacci mid resistance, 24725 is the Fibonacci resistance, 25981 is Bollinger band upper width resistance and 26277 is the Fibonacci resistnace which also the previous high of Nifty. Once this zone is crossed in a long term we can reach the targets of 27162 Fibonacci resistance, 28331 Fibonacci golden ratio resistnace and 29497 which is the approximate nex channel top. (This is the Medium to Long term outlook of Nifty).
This is how you can analyse any index or a stock using the 6 indicators mentioned in the writeup. I give top most priority to these 6 indicators in my analysis.
Disclaimer: Disclaimer: The above information is provided for educational purpose, analysis and paper trading only. Please don't treat this as a buy or sell recommendation for the stock. We do not guarantee any success in highly volatile market or otherwise. Stock market investment is subject to market risks which include global and regional risks. We will not be responsible for any Profit or loss that may occur due to any financial decision taken based on any data provided in this message.
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