Archives : 5690 FINALLY BREACHED - 14/01/2011.
5690 FINALLY BREACHED 14/01/2011.
 

BEARISH HEAD & SHOULDERS.

 

The Bulls were hoping that the critical level of 5690 will hold, but the bears showed their muscle power and finally the bulls had to give in. The market had already formed a lower top at 6181 as compared to previous top of 6338 and now lower bottom will be formed as the previous bottom at 5690 was breached. This signals that the downtrend is firmly intact.

 

The market is now heading towards the 200dma which is at 18673 for the Sensex and 5605 for the Nifty. A breach of the 200dma will confirm the breach of the long term uptrend. It has been observed that our market respects the 200dma and it would not be a surprise if the indices manage a minor pull-back from the support of 200dma. But that will not spell the end of correction or the downtrend; it will simply suggest a dead cat bounce from oversold territory. Besides this both the indices have formed Bearish Head & Shoulders pattern and the target is 17884 for the Sensex and 5352 for the Nifty.



5690 FINALLY BREACHED 14/01/2011.
 

BEARISH HEAD & SHOULDERS.

 

The Bulls were hoping that the critical level of 5690 will hold, but the bears showed their muscle power and finally the bulls had to give in. The market had already formed a lower top at 6181 as compared to previous top of 6338 and now lower bottom will be formed as the previous bottom at 5690 was breached. This signals that the downtrend is firmly intact.

 

The market is now heading towards the 200dma which is at 18673 for the Sensex and 5605 for the Nifty. A breach of the 200dma will confirm the breach of the long term uptrend. It has been observed that our market respects the 200dma and it would not be a surprise if the indices manage a minor pull-back from the support of 200dma. But that will not spell the end of correction or the downtrend; it will simply suggest a dead cat bounce from oversold territory. Besides this both the indices have formed Bearish Head & Shoulders pattern and the target is 17884 for the Sensex and 5352 for the Nifty.

 
TECHNICALLY SPEAKING. 

The Sensex opened the week at 19714, made a high of 19720, a low of 18811 and closed the week at 18860. The Sensex lost 831 points on a weekly basis. Similarly Nifty opened the week at 5901, made a high of 5907, a low of 5639 and closed the week at 5654. The Nifty too closed with a loss of 250 points on a weekly basis. Both the indices have formed a big body Black candle almost like a Marubuzo on the weekly charts. This is a Bearish Reversal pattern. On the daily charts too, the indices have formed a big body Black candle with long upper shadow suggesting further weakening of the trend.

The market is already below the 50dma (Sensex – 19942 and Nifty – 5985) and 20dma (Sensex – 19923 and Nifty 5968) and as a result the medium term as well as the short term trend continues to be down. The long term trend is still up as both the indices are still hanging on to the 200dma (Sensex – 18673 and Nifty – 5605). The indices will test the 200dma this week and the outcome will decide the long term trend of the market.

 

Both the indices have breached their previous bottom and are now correcting their medium term rise from 15960 to 21108 for the Sensex and 4786 to 6338 for the Nifty. The correction levels for the Sensex then will be 19141-18534-17926 and for the Nifty the retracement levels will fall at 5745-5562-5379.

 

On Friday both Sensex and the Nifty breached their previous bottom and managed a close below that level and in the process both the indices have given a Bearish Head and Shoulders Pattern breakout. The target as a result of this bearish breakout for the Sensex is 18418-17834 and that for the Nifty is 5517-5352.

 

Both the indices had formed a higher bottom at Sensex 18954 and Nifty 5690, which has been breached on Friday. Thus a lower top (Sensex 20664 and Nifty 6181) was already in place and now the lower bottom will be formed. Hence the short term trend has turned negative but the long term trend will remain intact as long as Sensex 17819 and Nifty 5348 remains intact.

 

Majority of the oscillators are in Sell mode. The MACD and ROC are in Sell mode and are in negative territory. The RSI has moved lower to 32 and continues with its Sell mode. OBV has too given a Sell along with the Money Flow Index which is at 38. Only the Stochastic Oscillator has moved up from oversold and signaled a Buy. The ADX has increased to 24 suggesting that the downtrend is gaining strength. The Directional Indicators continue to be in Sell mode.

 

The O.I. PCR has dropped and is quite low at 0.71 which is very near to the oversold levels. Whenever the O.I.PCR falls to such low levels then one can expect some sort of pull-back. Highest Open Interest is seen at 6200 Call and 5600 Put, which is suggestive of the trading range for the market in the near term. 5800 and 5900 Calls have seen good addition in open interest suggesting that those levels might act as resistance.

 

The Trendline Resistance for the Sensex is at 19615.

 

The Trendline Resistance for the Nifty is at 5885.

 

For the week ahead, Sensex will find Support at 18540-18237-17914 and will find Resistance at 19074-19342-19574.

 

For the week ahead, Nifty will find Support at 5567-5473-5372 and will find Resistance at 5715-5793-5874.

  
INDEX LEVELS:
  
 S3S2S1CLOSER1R2R3
Nifty5372547355675654571557935874
Sensex17914182371854018860190741934219574
   
LAST WEEKS RECOMMENDATIONS: We hit Bulls Eye as all the recommendations reached their targets with ease with the star performer being SAIL which fell by around 11%.
 
STOCKReco. PriceTgtReachedLot SizeProfit
Sell Cummins743717708500Rs.17,500
Sell SAIL1781631591000Rs.19,000
Sell YesBank2702572561000Rs.14,000
Sell PatelEngg291272263500Rs.14,000
Sell Maruti134012831263250Rs.19,250
    TotalRs.83,750
  
THIS WEEKS RECOMMENDATIONS:
  
STOCKCMPSLTgt-1Tgt-2
Sell Jet Air663676643622
Sell CentTex376382362345
Sell BajajAuto1246126112161183
Sell BOI417423404391
Sell JSWSteel969979948925
   

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