Monthly Technical Outlook of Nifty-July 2015

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July 02, 2015

Nifty Daily timeframe

Current Observation:

Daily Timeframe: Nifty is in a sharp up trended move in the last couple of sessions and it continued to move up on
Wednesday by around 80 points.

The immediate hurdle of previous swing highs around 8423 levels (25th June) have been broken on the upside and
the next resistances of around 8467 and 8489 (swing highs of 22nd May and 1st June respectively) are being
challenged on Wednesday.

We observe a formation of positive sequence of higher tops and bottoms as per daily timeframe chart and recent low
of around 8195 (29th June) could be considered as a new higher bottom of the sequence. Currently Nifty is moving
above the previous wing high and is in the process of forming new higher top.

The larger negative sequence of lower tops and bottoms are in the danger of breaking (the sequence could negate on
the Nifty moving above 8489 levels) and this is suggesting ongoing strong up trended move of the last few weeks,
than any bear market pullback rally.

The daily momentum oscillator like 14 period RSI has just turned above the key upper levels of 60. This could be
considered as a bullish range shift of 75-40 levels from the bearish high low range of 60-30 levels. This could be an
indication of strength of upside momentum.

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Nifty Weekly timeframe

Weekly Timeframe: After showing a strong upmove in the previous couple of weeks, Nifty opened this week with the
sharp negative note, but recovered smartly during intraweek.

The side by side bullish candlestick pattern has been formed so far now (week is not over) and Nifty has broken
above the hurdle of down sloping trend line (brown dotted down trend line) around 8365 levels as of now. Nifty
closing above that area during this week end is going to be important to continue with upside momentum for next
week.

Nifty is currently approaching the next strong resistance of previous broken support trend line (green ascending
intermediate trend line) as per change in polarity. This hurdle is now placed around 8620-40 levels for this and next
week.

The negative sequence, which was in force in the last four months is on the way to be negated (above 8500 level)
and this is hinting at the possibility that any decline from here could be a part of a new higher bottom of the
sequence. Hence the recent bottom of 7940 levels (12th June) seems to be in safe place as of now.

Weekly momentum oscillator like 14 period RSI has bounced back sharply from the key lower area of 40 levels and is
now placed at the junction of 50-52 levels. From here, the weekly RSI could move up to upper 60 levels as per the
theory of bullish high low range of 70-40 levels. This expected uptick in weekly RSI means more upmove for the
underlying for near term.

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Nifty Monthly timeframe

Monthly Timeframe: After showing a sharp decline in the month of March and April 2015, Nifty shifted into sideways
consolidation within a high low range of around 8500-7950 levels for the next couple of months (May and June-15).

June month saw a formation of small candle pattern with long lower shadow as per monthly timeframe chart, which
was inline with the formation of the small candle with long lower shadow of the month of May-15. Both of these
patterns are suggesting that the lows of around 7950-8000 levels are attracting strong buying interest in Nifty.

A hammer type candlestick pattern has been formed in the month of June, which is suggesting a formation of
intermediate higher bottom for Nifty as per larger timeframe chart. The positive sequence of higher tops and bottoms
is in force in Nifty monthly timeframe since Feb 2014 onwards.

The current formation of this positive HT&HB patterns as per monthly timeframe is indicating the less possibility of
Nifty decline sharply below 7940 levels for coming month.

Therefore, one may expect any decline in Nifty as per larger timeframe chart could be a buy on dips opportunity and
we expect Nifty to recover from any dips during intra month.

Monthly RSI is shifting into sideways phase around 65 levels in the last 3-4 months and any uptick in monthly RSI
from here could mean sharp trended up move in the market ahead, as per the formulation of RSI.

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Month Gone by:

Nifty Daily timeframe

Nifty started the month of June with sharp negative note, as the index formed swing high of around 8467 levels (1st
June) and begin with sharp declines.

The down trend continued for the initial couple of weeks of June and Nifty formed an important swing low of around
7940 levels (on 12th June) and witnessed sharp recovery from the lows.

The recovery attempt continued in the market from middle of June to later part of the month. The intra month dips
during later part of June have been absorbed by the longs and Nifty closed the month near the higher end of the
range.

So we observe a V type recovery in Nifty the month of June, which was a sharp decline and even sharper recovery.

Summing Up:

The detailed study of Nifty as per smaller to larger timeframe chart (daily, weekly and monthly) is positive and more
upmoves could be in store.

Nifty could continue its uptrend towards the key overhead resistance of 8650-8700 levels (as per change in polarity
principle) and is expected to show minor declines from there. The intra month decline up to the support of around
8250-8200 levels could be an opportunity for buy on dips.

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Technical Research Analyst: Nagaraj Shetti

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