Nifty Weekly Analysis for the week ending 22 December 2017

Sensex opened the week at 33364, made a high of 33964, low of 32595 and closed the week at 33940. Thus it closed the week with a gain of 477 points (1.43%). At the same time the Nifty opened the week at 10263, made a high of 10501, low of 10074 and closed the week at 10493. Thus the Nifty closed the week with a gain of 160 points (1.55%).  The benchmark indices settled at record closing highs with the Nifty touching its crucial 10,500 in last leg of trade, but ended below that mark.

Let us discuss few observations on last week/month Indian benchmark movements. 

1. In point no.1 of Last week we had discussed “On the weekly charts, both the indices have formed higher high higher low candle which is a classic bullish setup.”  Market triumphs for third straight week, mark record highs
2. In point no.2 of Last week we have discussed “On weekly chart almost a bullish hammer pattern is formed which is signalling an emergence of sharp buying interest from the lows. Confirmation require on next candle for bullish reversal.”   First day of week itself market closed above previous week high and confirmed the bullish reversal.
3. In point no.5 of Last week we have discussed “ Both indices made higher top, higher bottom candle on weekly chart but,  still trading below down trending channel line.  Market to close well above the channel line for the bullish reversal.   Also  Nifty should break above previous month high to negate the correction is completely over.  ".  First day of the week Indices closed above critical Trend reversal level of Sensex 33369 and Nifty 10333. Also broke previous month high.
4. On Friday, Sensex has formed a bullish White opening Marubuzo.  On the weekly charts, both the indices have formed a bullish White closing Marubuzo.  Both daily and weekly indicate the bullishness of the market. 
5. From 28 September to 6^th November Nifty gained 803 points in 25 days and the counter trend from 6th November to 6^th December Nifty corrected 458 points in 21 days which is 57% of the 803 point.  Market reversed on 6^th December and retraced more than 100% in 12 days i.e. 468 points against 458 points.  Timewise Nifty retraced in half of the time the correction took.   This indicate bullishness of the market and so target for this upmove set in the range 10700-10850 range..
6. As per Dow Theory, Index completed a bullish inverse head and shoulder pattern on daily time frame and the target is 11000.
7. Next week will be a truncated week with Monday being a trading holiday.   There is a probability of profit booking at higher levels as a bearish divergence persist on RSI.   Nifty has set a fresh 14-period high, while RSI has not. Also, it has continued to form lower tops and is yet to break out of this formation. The weekly MACD is still bearish even as it trades below the signal line.   So once the lead indicators come out of bearish divergence, we can expect the above mentioned target of 11000.
8. Global financial markets: Global stock markets ended the week on a positive note
9. On Weekly basis, FII were sellers in the cash segment. 
10. Options data for December series indicate highest Call Open Interest is at the strike of 10500 whereas the highest Put build-up continues at the strike of 10000. Thus Options data suggests a trading range with resistance at 10500 & support at 10000.  There is huge unwinding seen in 10400 call strike.  10500 call strike also there are unwinding seen.  At the same time adding of Open Interest seen in put strike 10450 and 10500.  These indicate bullish momentum of market.   Looking at the January series highest OI at call option seen at 11000 strike and put option open interest seen at 10000 strike.