[Premium] Three Charts For The Week Ahead

JC Parets
December 20, 2021

We retired our "Five Bull Market Barometers" in mid-July last year to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

Last week we focused on Shanghai Composite, Indian Indices and Nifty Media.

Let's move into this week's topics.

1. The first chart we're looking at is the Equal-Weighted BRICS index.

The BRICS index consists of the five major emerging economies: Brazil, Russia, India, China, and South Africa. Earlier in June, the index faced resistance at 2018 high. As we know, risk across the global asset classes peaked out in 2018, so the pause was evident. The index has formed a rounding top pattern and given up its yearly gains. This is among the Intermarket risk we're looking out for in India.

Notice that currently, the price is trading below the 2020 highs as well. Hence, we've seen the price finding it difficult to sustain near highs and also give up crucial support levels.

The pattern playing out at the moment isn't positive for the market. We'd like to keep watching this as the market unfolds.

2. The second chart we're looking at is the First Trust India Nifty 50 Equal Weight ETF.

This U.S. Dollar-denominated ETF provides equal exposure to all Nifty 50 constituents, allowing smaller companies to contribute as much as the larger ones within the index. Here price faced resistance at 161.8% Fibonacci level from 2018 high - 2020 low extension. Currently, we're looking for sustenance at June highs.

This is a crucial level to track since the price is just about holding on to its support levels. We've seen certain parameters hint at a negative move in the market and a move below the support would only add to that negative outlook.

3. The third chart we're looking at is the Nifty IT Index. IT has been in a sideways consolidation at a crucial Fibonacci level for 3.5 months. Relative to Nifty 100, it made a new 52-week high.

Further, the average drawdown of Nifty 500 IT stocks has been narrowing for the past three weeks. The new high on ratio before price and narrowing drawdown is significant evidence for continuing its solitude outperformance.

Which sector is displaying strength at the moment? The answer is right here.

In our view, these charts will help set the tone for this week and provide us with information on how we should approach the market in the coming weeks.

Also, make sure to check out our other weekly post, "Trade Of The Week."

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team

Filed Under: