Nifty Auto - 10,800 The index had touched an all time high in December 2017 Subsequently, it turned negative and started a downward trend. In addition, it saw a sharp selloff due to COVID-19 and retested multi year lows in March 2020. However, it reversed sharply from that level and recovered around 88% of the entire fall that occurred in between December 2017 to March 2020. We consistently cover and discuss this sector in our monthly reports and webinars with our subscribers. In our recently published report on October 5, we mentioned that ‘’the index is trading near its breakout level, and sustainable trading above 10,800 may lead this index toward the 12,000 mark in the coming few weeks and month(s)’’. The index is almost moving as per our expectations.
Currently, the multi time frame chart analysis of Nifty Auto indicates:-
After hitting a multi year low in March 2020, this sectoral index has reversed its trend and gradually start ed moving upside. During this journey from the low of March 2020, it formed 14 bullish candles and ve bearish candles on the monthly chart.
The Study of weekly chart suggests that, this index has formed a small top in February 2021 from a medium term perspective and afterward turned volatile. Subsequently, it formed a ‘’ Symmetrical Trian gle’’ pattern on weekly as well as on the daily chart and now successfully gave breakout above the upper band of the triangle. However, on a monthly time frame chart it traded in a sideways zone between March 2021 and September 2021.
Further, the momentum indicator RSI on the monthly chart gave an upside breakout after six months of consolidation and currently placed around 65 level. Likewise, RSI on the weekly chart has formed a ‘’ bull ish hidden divergence’’.
Apart from price action and RSI pattern, other technical indicators like MACD and DMI/ADX also indicate bullish trend weekly and monthly charts.
The sectoral index is trending above 200-week moving average on weekly chart and above all key moving averages on the daily chart. Currently, this index is placed around 3.57% and 7.00% above its 50 and 200 - DMA, respectively.
Nifty Auto has now given an upside breakout after six months of consolidation on above average volume. We expect sustainable trading above 10,800 may lead this index beyond 12,000 mark. Hence, after considering various factors based on price pattern analysis, technical indicator analysis and fibonacci retracement analysis we assume this index may move toward 12,000 - 12,500 levels in the coming few weeks and month(s). However, on the flip side, index may see high volatility and turn negative if it fails to hold above 10,800 - 10,600 levels.
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