Nifty & Bitcoin This Week

Apr 23, 2021

Brijesh Bhatia, Research analyst

Nifty and bitcoin have been very volatile in recent weeks. In this edition, we will take a look at both asset prices.

Let's get started...

The Week Gone By

Nifty, after making the high of 15,431 in February 2021, corrected by about 8% in the last 9 weeks.

Since 16 February 2021, when Nifty hit an all-time high, the midcap and smallcap indices have outperformed with positive returns of 0.75% and 3.46% respectively.

During the same period, metals stocks have outperformed by gaining 24.56% followed by Commodities Index (+6.12%).

As a traders or investors, you might be wondering if this is the good time to invest in markets.

Let's analyse the chart of bitcoin and the chart of Nifty. Both have fallen off a cliff.

Index Returns
NIFTY SMLCAP 100 3.46
Nifty 100 -5.81
Nifty 200 -5.03
Nifty 50 -6.35
Nifty 500 -4.28
Nifty Midcap 100 0.75
Nifty Next 50 -2.41
*Period: 16-02-2021 to 23-04-2021

The Week Ahead

Nifty - The Gaps Saga

Gaps are like scar on charts which are remembered for a long time.

The consecutive truncated weeks witnessed lots of gaps which makes traders' life difficult.

Nifty Daily Chart

 

The gaps are the strongest support and resistance levels to trade and invest.

The run-away gap formed in February 2021 has been filled and will turn into resistance from support (marked in the circle).

For bulls to confirm a bottom in place, they will need to cross above last week's gap below 14,559. Till then, the bears are in control and a test of 14,000 cannot be ruled out.

As we are heading into monthly F&O expiry week, 14,000 will play crucial role as 14,000 PE have been written aggressively since the start of the series.

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These option writers will panic only if 13,879 is breached which doesn't seem to be the case so far.

As per time cycle theory marked on the chart, we might witness a reversal next week especially between 27th to 29th April 2021.

The lows made between the above-mentioned days need to be held on Friday which might form short term bottom.

We are expecting the range of 13,964-14,071 will be major hurdle for bears to break and reversal is likely in the same zone.

Bitcoin - The Political Drama

Falling off the cliff is nothing new for Bitcoin and Cryptos. This instrument is not for light-hearted traders as volatility is always high in this asset class.

Bitcoin has corrected by 25% from the highs and the last 8 out of 9 sessions have been brutal for the bulls.

What's in Store Now?

Bitcoin Daily Chart

 

The daily chart of Bitcoin indicates the bearish momentum is likely to take a pause for the following reasons:

  1. Bullish Shark Harmonic reversal pattern which has potential reversal zone at US$ $45,000.
  2. Gann Fan highlights the support around US$ 48,000.
  3. The demand zone is US$ 42,000 - US$ 43,000 zone.
  4. As per Fibonacci Time Cycle of 78 days, the breakout is likely to retest and reverse by 27th or 28th April 2021 (+/- 3 days).

Analysing the technical structure, a fresh bullish rally might resume soon after retesting the US$ 45,000 - US$ 46,000 zone.

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In a different vein, earlier this month, I did a deep dive into the price action of bitcoin.

Is it a bubble? Can the rally sustain? How high can the prices go?

I shared my views on these questions and more in the video below.

Conclusion

The bears are in control of both the Nifty and Bitcoin. We are expecting the bearish momentum to end soon.

Nifty is likely to find the lost ground in the range of 13,964-14,071 as we are witnessing multiple support zones as per technical and derivatives structure.

Bitcoin falling off the cliff on political drama is likely to take a pause in the zone of US$ 45,000 - US$ 46,000 as the support is placed with Fibonacci time cycle.

Warm regards,

Brijesh Bhatia
Brijesh Bhatia
Research Analyst, Fast Profit Report
Equitymaster Agora Research Private Limited (Research Analyst)

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2 Responses to "Nifty & Bitcoin This Week"

Premkumar R

Apr 24, 2021

Always enjoy your videos on bullion.

Like 

Uday Konkankar

Apr 24, 2021

The transcript is incomplete. Pls repost the complete version

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Equitymaster requests your view! Post a comment on "Nifty & Bitcoin This Week". Click here!