Study on the charts of Nifty futures

5 Feb 2022

Educational purpose only

Study on the charts of Nifty futures

***Dow Jones is -21 as I do this study so, we consider it flat.

LTP: 17503.00
Support: 17350.00
Resistance: 17600.00 & 17750.00


17600.00 is a very crucial level in the 15 min charts. It is where the price action and supertrend meet. What I mean is, the resistance according to price action and the supertrend in the 15 min chart of Nifty futures is at 17600.00 hence I say that this is a very crucial level. We can consider a bullish approach once the prices cross and close above 17600.00


Let’s understand the indicators on the 15 min charts here.
1. There is a bullish divergence here which we cannot ignore but the MACD is struggling sideways.
2. The candles are trading below the VWMA which is a sign of weakness.
3. The supertrend is bearish.

The trend doesn’t look good either.

We cannot, rather, we should not decide anything based on just a single timeframe, so, let’s understand the hourly charts now.



The resistance at 17600.00 has been respected from 24th of January 2022 all the way to 1st February 2022 after which we saw a breakout which resisted the next resistance at 17750.00.
The theory says that the resistance becomes and acts as a support once it is broken upwards. The same happened to 17600.00 level on the 2nd of February but then the support was broken on the 3rd and it carried on till the 4th which was yesterday. This again proves my statement that 17600.00 should be considered a very important level.

Let’s study the indicators now:
1. Supertrend is bearish.
2. Candles are resisting the VWMA which can never be good.
3. MACD is bearish.
4. RSI has resisted the 50 zone which is another bearish signal.

It looks like a new downtrend has been made starting 3rd February as well.

Now, let’s enhance our study and move on to the daily charts.




The first thing I noticed here is that the high made on 19th October 2021 was 18604.45 and the next peak made on 18th January 2021 was at 18350.95. This indicates a pattern called lower highs which is bearish but going deeper, let’s study the low points made. The first low point was made on 20th December 2021 at 1641.20 and the second low point that I see is made on 25th January 2022 at 16836.80. Now this is called higher lows and when we draw a pattern from the lower highs and the higher lows, we get a pattern called the symmetrical triangle (image below)


This pattern doesn’t give us an idea about the trend on its own but it does provide with liquid resistance and support. What is means is that a trend can be confirmed if the resisting or support trendline is breached.

Now, going back to the main chart (hourly timeframe chart 1), let’s understand the indicators:
1. The candles have resisted the VWMA which can prove bearish.
2. Supertrend is bearish with resistance at 17900.00
3. MACD is sideways and we will consider it neutral.
4. RSI, like MACD is neutral.

Now, after understanding charts drawn on all the above timeframes, let me draw a conclusion.

Conclusion:

1. The trend can be considered as neutral until we get a close above 17600.00 or below 17350.00
2. Nifty seems to be range-bound between the mentioned resistance and support.
3. Trading strategy can be swing trading which means buy near the support and sell near the resistance but a long term idea cannot be derived.