Nifty cash 24641.80 CASH, NSE index / indices
Sustained above and close above 24705 will be good for Bulls
Thursday, December 12, 2024
Tuesday, December 10, 2024
NIFTY CHART
NSE INDICES / INDEX NIFTY 24619
The Nifty index, with the given details, is showing some key technical levels and chart patterns. Let's break down the analysis:
Key Observations:
Negative Divergence on the Hourly Chart:
- Similar to Bank Nifty, the Nifty index is exhibiting negative divergence on the hourly chart. This means the price is likely making higher highs while momentum indicators (like RSI or MACD) are forming lower highs, which signals weakening momentum. This could indicate that the price might struggle to maintain the current upward trend or could potentially move lower in the near term.
Support Zone (24590-24550):
- The immediate support for Nifty is seen in the 24590-24550 range. A decline in this support area will be a crucial level to watch. If the price holds above this range, it could still indicate consolidation or a sideways movement. However, a breakdown below this support could suggest further downside.
Downside Targets:
- If Nifty fails to hold above 24590-24550, the index could likely test lower levels. The identified downside targets are:
- 24311 (near-term support level),
- 24063 (deeper support zone),
- 23666 (longer-term support level).
- These levels provide potential downside targets in case the negative divergence continues and the index starts to decline.
- If Nifty fails to hold above 24590-24550, the index could likely test lower levels. The identified downside targets are:
Expected Sideways Movement with Negative Bias:
- Based on the negative divergence and the support range, the overall expectation is for the index to move sideways, but with a negative bias. This suggests the market could consolidate within a range, with the downside risk being more prominent than the upside potential.
Key Levels:
- Immediate Support: 24590-24550.
- Next Downside Targets: 24311, 24063, and 23666.
- Resistance for Upside Move: Any significant rally would need to break through the recent highs to invalidate the negative bias, but with negative divergence in play, the expectation leans towards the downside or sideways.
Conclusion:
Given the negative divergence on the hourly chart, Nifty is likely to face downside pressure if it fails to hold the immediate support zone at 24590-24550. A break below this level could lead the index to test lower targets, with potential downside support levels around 24311, 24063, and 23666. However, the broader market could also move sideways with this negative bias, and any bullish reversals would require a clear break above the current resistance.
NEGATIVE DIVERGENCE
Negative divergence is a technical analysis concept used to identify potential reversals in a price trend. It occurs when the price of a financial instrument moves in one direction (often higher), but a technical indicator—such as the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), or Volume—moves in the opposite direction (often lower).
Here’s how to identify a trend with negative divergence:
1. Choose an Indicator
- Common indicators for spotting divergence include:
- RSI: Measures the speed and change of price movements. Divergence with RSI is widely used.
- MACD: Tracks the relationship between two moving averages of a security’s price.
- Stochastic Oscillator: Compares a particular closing price to a range of prices over a specific period.
2. Examine the Price Trend
- Look for higher highs in price (indicating an uptrend).
3. Compare with the Indicator Trend
- Check if the indicator is making lower highs during the same period when the price is making higher highs.
- For example:
- Price forms a new high, but RSI or MACD forms a lower peak.
4. Confirm Negative Divergence
- Ensure the divergence is clear and not marginal.
- It’s more reliable when:
- It occurs near overbought levels (e.g., RSI > 70).
- The divergence spans multiple peaks.
5. Look for Additional Signals
- Combine with other technical signals like:
- Reversal candlestick patterns (e.g., shooting star, bearish engulfing).
- Trendline breaks.
- Reduced volume on price highs.
Example:
- Price Action: A stock’s price rises to $100 (high 1), pulls back, then rises again to $110 (high 2).
- RSI Indicator: RSI is at 75 during high 1 but only 68 during high 2, despite the higher price.
- Divergence: This indicates a weakening momentum and potential reversal.
Negative divergence signals that an uptrend may lose strength and could reverse. However, it’s not a guaranteed reversal indicator, so confirm it with additional tools or patterns.
BANK NIFTY
BANKNIFTY 53407.8 CASH INDEX / INDICES / NSE
Bank Nifty is currently facing resistance in the 53732-53750 zone, as indicated by its recent price action and the presence of negative divergence on the hourly chart. Let's break down the key observations and technical analysis:
Negative Divergence on the Hourly Chart: Negative divergence occurs when the price of an asset makes a higher high, but the corresponding indicator (e.g., RSI, MACD) forms a lower high. This suggests that the momentum is weakening, and the price might not be able to sustain the upward movement.
Recent Price Action:
- The Bank Nifty attempted to break the 53732-53750 resistance zone on two separate occasions:
- The first attempt reached a high of 53775, but it closed lower at 53733.
- The second attempt saw a high of 53749, with a closing price of 53648.
- These failed attempts to sustain above the resistance level indicate that the sellers are actively defending this area.
Retracement Resistance: The price action around 53732-53750 represents the current swing retracement resistance. If the price fails to break through this level decisively, there could be a pullback or a continuation of the downward trend.
Key Levels:
- Resistance Zone: 53732-53750, with the highs of 53775 and 53749 acting as significant barriers.
- Support Levels: Any breakdown below the recent closing prices of 53648 could bring the price closer to the next support levels. A strong move below these levels could signal a deeper retracement or a continuation of the downtrend.
Conclusion:
Given the negative divergence and the repeated failure to break the resistance zone, the Bank Nifty may face downward pressure if the 53732-53750 resistance continues to hold. Traders may look for signs of weakness around this zone for potential short positions, while a break above 53750 could invalidate this bearish scenario, leading to a potential upside move. Keep an eye on the hourly chart for any signs of further divergence or shifts in momentum.
Negative divergence is a technical analysis concept used to identify potential reversals in a price trend. It occurs when the price of a financial instrument moves in one direction (often higher), but a technical indicator—such as the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), or Volume—moves in the opposite direction (often lower).
Here’s how to identify a trend with negative divergence:
1. Choose an Indicator
- Common indicators for spotting divergence include:
- RSI: Measures the speed and change of price movements. Divergence with RSI is widely used.
- MACD: Tracks the relationship between two moving averages of a security’s price.
- Stochastic Oscillator: Compares a particular closing price to a range of prices over a specific period.
2. Examine the Price Trend
- Look for higher highs in price (indicating an uptrend).
3. Compare with the Indicator Trend
- Check if the indicator is making lower highs during the same period when the price is making higher highs.
- For example:
- Price forms a new high, but RSI or MACD forms a lower peak.
4. Confirm Negative Divergence
- Ensure the divergence is clear and not marginal.
- It’s more reliable when:
- It occurs near overbought levels (e.g., RSI > 70).
- The divergence spans multiple peaks.
5. Look for Additional Signals
- Combine with other technical signals like:
- Reversal candlestick patterns (e.g., shooting star, bearish engulfing).
- Trendline breaks.
- Reduced volume on price highs.
Example:
- Price Action: A stock’s price rises to $100 (high 1), pulls back, then rises again to $110 (high 2).
- RSI Indicator: RSI is at 75 during high 1 but only 68 during high 2, despite the higher price.
- Divergence: This indicates a weakening momentum and potential reversal.
Negative divergence signals that an uptrend may lose strength and could reverse. However, it’s not a guaranteed reversal indicator, so confirm it with additional tools or patterns.