Archives : CRITICAL SUPPORTBAT 5344 - 06/08/2010.
CRITICAL SUPPORT AT 5344 - 06/08/2010.
 

The support at 5344 continues to provide strong support to the market. This level has managed to hold the market for the past three weeks and as a result it has become a critical support level. Currently the support level for Sensex is at 17833 and Nifty 5344. In case the market breaches the above mentioned levels, a short term trend reversal will be signaled and the market will then head towards the next major support which is at Sensex 17373 and Nifty 5210.


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CRITICAL SUPPORT AT 5344 - 06/08/2010.
 

The support at 5344 continues to provide strong support to the market. This level has managed to hold the market for the past three weeks and as a result it has become a critical support level. Currently the support level for Sensex is at 17833 and Nifty 5344. In case the market breaches the above mentioned levels, a short term trend reversal will be signaled and the market will then head towards the next major support which is at Sensex 17373 and Nifty 5210.

 
TECHNICALLY SPEAKING.
 

The Sensex opened the week at 17911, made a high of 18295, a low of 17911 and closed the week at 18143. The Sensex gained 275 points on a weekly basis. Similarly Nifty opened the week at 5369, made a high of 5487, a low of 5351 and closed the week at 5439. The Nifty too closed with the week with a gain of 72 points.

 

On the weekly charts both Sensex and Nifty have formed a big white body candle. Nifty has managed to form a bullish Harami pattern if we consider last two weeks candles. On the daily charts both the indices have formed a small black body spinning top, which is a neutral formation. Hence the onus will lie on the market movement on Monday.

 

Sensex and Nifty have formed higher bottoms at 17838 and 5349 respectively as compared to Sensex 17373 and Nifty 5210. The short term trend will be in danger only if both the indices close below their respective higher bottoms i.e. Sensex – 17838 and Nifty – 5349. In such a case a short term down trend will be triggered and the market will then head towards next major higher bottom which is at Sensex 17373 and Nifty 5210. One need not worry about the medium term as long as the level of 17373 for the Sensex and 5210 for the Nifty remains intact.

 

As long as the market remains above the 20dma, the short term trend will remain positive. The 20dma for the Sensex falls at 18019 and Nifty at 5411. The intermediate trend will be reversed from up to down, if the 50dma is breached. 50dma for the Sensex is at 17618 and Nifty 5287.

 

Oscillators are painting a mixed picture. MACD continues in its Sell mode. Stochastic oscillator has given a Sell signal as % K has cut % D from above. While the OBV and RSI continues with their buy mode. ROC continues in its buy mode by staying in the positive zone. But the area of concern is the negative divergence which is seen on the oscillators like MACD, RSI and ROC. The ADX continues to be at 27 justifying the strength in its uptrend. The Directional Indicators continue to be in buy mode.

 

Both Sensex and Nifty have completed a bullish flag pattern breakout and as a result the target for that will be Sensex – 18732 and Nifty – 5609.

If we look at broader picture, then we are still correcting the fall of the Sensex from 21206 to 7697 and Nifty from 6357 to 2252. Since both the indices have managed a close above their 61.8% retracement levels, the next possible target will be Sensex 18315 and Nifty 5478 which are the 78.6% retracement levels of the entire previous fall. Nifty has managed to reach 5478 two weeks back, while the Sensex has managed a high of 18295 last week, which is almost just below the 78.6% level of 18315.

 

Since last October, the market is moving in a rising channel and the channel top has provided strong resistance to the market and that supply trendline top falls at Sensex 18414 and Nifty 5525. Both the rising channel trendline top and the 78.6% retracement levels are very near to each other and hence Sensex and Nifty are likely to find difficulty in crossing over 18315-18414 and 5478-5525 respectively.

 

The O.I.PCR is quite bullish at 1.59. Highest Open Interest build up is seen at 5300 strike Put and hence it is expected to provide strong support in the short term. Strong Call writing is visible at the strike of 5600. The data clearly suggests that the Nifty is likely to move in a trading range from 5300 on the lower side to 5600 on the higher side for the August series.

 

Sensex has strong trendline resistance which is also the rising channel top at 18414. The trendline support for the Sensex is at 17833.

 

Nifty has strong trendline resistance which is also the rising channel top at 5525. The trendline support for the Nifty is at 5344.

 

For the week ahead, Sensex will find Support at 17990-17833-17678 and will find Resistance at 18265-18414-18566.

 

For the week ahead, Nifty will find Support at 5390-5344-5300 and will find Resistance at 5477-5525-5568.

   
INDEX LEVELS:
  
 S3S2S1CLOSER1R2R3
Nifty5300534453905439547755255568
Sensex17678178331799018143182651841418566
   
LAST WEEKS RECOMMENDATIONS:
 
Majority of the recommended stocks reached their targets except for M&M and Spice Jet. But the star performer of the past week was Bank of India and Jain Irrigation.
 
STOCKReco. PriceTgtReachedLot SizeProfit
Buy BoB752768782500Rs.15,000
Buy BoI4104284451000Rs.35,000
Buy M&M661675670250Rs.2,250
Buy JainIrrig123512721315250Rs.20,000
Buy SpiceJet6266644000Rs.8,000
    TotalRs.80,250
  
THIS WEEKS RECOMMENDATIONS:
  
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Disclaimer : The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are solely responsible for their actions. Information is obtained from sources deemed to be reliable but is not guaranteed as to accuracy and completeness.

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