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Analyze NIFTY Trends

The document outlines a comprehensive framework for analyzing NIFTY's potential movement using various indicators such as trend analysis, support and resistance levels, momentum indicators, volume analysis, option chain analysis, India VIX, sector strength, and global factors. Key rules and thresholds are provided for each indicator to determine bullish or bearish sentiment. The emphasis is on combining multiple indicators for a more accurate prediction rather than relying on a single factor.

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vinod
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30 views3 pages

Analyze NIFTY Trends

The document outlines a comprehensive framework for analyzing NIFTY's potential movement using various indicators such as trend analysis, support and resistance levels, momentum indicators, volume analysis, option chain analysis, India VIX, sector strength, and global factors. Key rules and thresholds are provided for each indicator to determine bullish or bearish sentiment. The emphasis is on combining multiple indicators for a more accurate prediction rather than relying on a single factor.

Uploaded by

vinod
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

To analyze whether NIFTY is likely to go UP or DOWN, use a step-by-step framework.

No single
indicator is enough—combine trend, momentum, volume, derivatives, and global cues.

1️⃣ Trend Analysis (First & Most Important)


Use Moving Averages
20-DMA → Short-term trend
50-DMA → Medium-term trend
200-DMA → Long-term trend
Rules:
📈 NIFTY above 20 & 50 DMA → Bullish
📉 NIFTY below 20 & 50 DMA → Bearish
⚠️ Near 200 DMA → Trend change zone
Golden Cross (50 DMA > 200 DMA) → Strong UP trend
Death Cross (50 DMA < 200 DMA) → Strong DOWN trend

2️⃣ Support & Resistance (Price Action)


Support → Level where buying comes
Resistance → Level where selling comes
How to judge direction:
Breaks resistance + holds → 🔼 Uptrend
Breaks support + fails to recover → 🔽 Downtrend
Between support & resistance → Sideways market
👉 Check Daily & Weekly charts for accuracy.

3️⃣ Momentum Indicators


RSI (Relative Strength Index)
Above 60 → Strong bullish momentum
Below 40 → Strong bearish momentum
>70 → Overbought (possible correction)
<30 → Oversold (possible bounce)

MACD
MACD line above signal line → Bullish
MACD line below signal line → Bearish
Histogram expanding → Strength increasing
4️⃣ Volume Analysis
📈 Price UP + Volume UP → Strong rally
📉 Price DOWN + Volume UP → Strong selling
Price UP + Volume DOWN → Weak move (fake breakout possible)
Volume confirms the truth of the move.

5️⃣ Option Chain Analysis (Very Powerful)


Put–Call Ratio (PCR)
PCR > 1 → Bullish sentiment
PCR < 0.8 → Bearish sentiment

Open Interest (OI)


Heavy Call OI at a strike → Resistance
Heavy Put OI at a strike → Support
Example:
Highest Put OI at 23,000 → Strong support
Highest Call OI at 23,500 → Strong resistance

6️⃣ India VIX (Volatility Index)


VIX < 13 → Stable / Bullish market
VIX 15–20 → Caution
VIX > 20 → Fear / Bearish moves likely
If NIFTY falling + VIX rising → Strong bearish sign 🚨

7️⃣ Sector Strength Check


NIFTY goes UP only if heavyweight sectors rise:
Banking (HDFC Bank, ICICI)
IT
Reliance
FMCG
👉 Use Sectoral Indices:
Bank Nifty
Nifty IT
Nifty FMCG
If Bank Nifty weak, NIFTY usually struggles.
8️⃣ Global & News Factors (Final Check)
Watch:
Dow Jones / Nasdaq (previous night)
SGX Nifty / Gift Nifty
USD–INR
Crude Oil
FII/DII data
FII buying + Market above 50 DMA = Strong Bullish setup

🔁 Simple Daily Checklist (Quick Method)


Factor Bullish Bearish

Price vs 50 DMA Above Below

RSI > 60 < 40

Volume Rising Rising on fall

PCR >1 < 0.8

VIX Falling Rising

Bank Nifty Strong Weak

🎯 Final Truth
❌ Nobody predicts NIFTY perfectly
✅ Probability analysis + risk management wins

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