Sep21-W4: Nifty to perform mean reversion this week (Sep20 to Sep24)?

Last week, I had written about 2 possibilities for mean reversion setups. Either momentum indicator keeps reversing or it makes a lower top while price makes a higher high. On Mondya, Nifty gave an impression of former scenario. Wednesday, however, made it clear that Nifty was not done yet. The big red candle on Friday now leaves everyone in a perfect climax.

Now the following is my analysis for coming week based on what I am looking at (You may want to open image in new tab or save it for better view)

This is the second time Nifty has tried to go beyond the black parallel channel. It is interesting to note behavior of various momentum indicators

  1. RSI does not show any indication of divergence
  2. Stochastic is relatively flat but it is showing slight indication of exhaustion
  3. CCI can be treated as a case of divergence

So what’s the conclusion? I can’t conclude but best guess is that Nifty will revert to 5 EMA. Since momentum is still quite strong, I do not expect a reversal till 15 EMA

Scenarios for the week ahead (highlighted as yellow box with black lines dissecting scenarios)…

ScenarioAnticipated Price Action
ConsolidationBetween 17800 and 17350
DowntrendIf breach below 17350; to drop somewhere till 17100
UptrendIf breach above 17800; to rise somewhere till 18050

Earlier we heard an Evergreen was stuck in Suez Canal and now there is an Evergrande stuck in China. Will the Nifty get stuck, ever?

DISCLAIMER: I am not a SEBI registered adviser. All the information provided on this website is for educational / informational purposes only and should not be taken as investment advice.