Archives : NIFTY FORMS A JUJI - 29/07/2011.

NIFTY FORMS A ‘JUJI’ – 29/07/2011.

MARKET HOLDS ON TO WEEKLY SUPPORT.

As expected the strong resistance zone mentioned last week proved to be too strong and the market reversed exactly from there. The reversal was provided by the dreaded 50bps interest rate hike by the RBI. The strength of the fall was so strong that the lower support at 50dma was breached without much effort. As a result the short term, medium term and the long term trend has turned down. Both Sensex and Nifty are holding on to their weekly support in the form of neckline of the weekly head and shoulders. Minor ray of hope is provided by the candlestick formation called Juji on the daily charts.

 

 

 


NIFTY FORMS A ‘JUJI’ – 29/07/2011.

MARKET HOLDS ON TO WEEKLY SUPPORT.

As expected the strong resistance zone mentioned last week proved to be too strong and the market reversed exactly from there. The reversal was provided by the dreaded 50bps interest rate hike by the RBI. The strength of the fall was so strong that the lower support at 50dma was breached without much effort. As a result the short term, medium term and the long term trend has turned down. Both Sensex and Nifty are holding on to their weekly support in the form of neckline of the weekly head and shoulders. Minor ray of hope is provided by the candlestick formation called Juji on the daily charts.

TECHNICALLY SPEAKING. 

The Sensex opened the week at 18753, made a high of 18944, a low of 18131 and closed the week at 18197. The Sensex lost 525 points on a weekly basis. Similarly Nifty opened the week at 5633, made a high of 5702, a low of 5453 and closed the week at 5482. The Nifty too closed with a weekly loss of 151 points.

 

Both Sensex and Nifty have formed a Juji which is a long legged doji on the daily charts on Friday. Juji has long shadows which underlines the kind of uncertainty prevailing in the market. Juji is the second doji formed after the first doji was formed on Thursday. The formation of two dojis on two consecutive days implies that the downtrend in the shorter term timeframe is losing some strength. One cannot call this a sign of bullishness, but questions are being raised about the short term downtrend. On the contrary, weekly charts don’t inspire any confidence as there is a big black body candle formed, which engulfs the previous weeks small white body. This is a continuation of the down trend on the weekly charts.

 

The market was trading well within the boundaries made by the 50dma and the 200dma. But the interest rate hike by the RBI broke that trading range as the market breached the 50dma and went below it. As a result, both the indices are below their short term moving average 20dma (Sensex – 18608 and Nifty – 5595), medium term moving average 50dma (Sensex – 18377 and Nifty – 5519) and long term moving average 200dma (Sensex – 19002 and Nifty – 5703). Thus the short term, medium term and the long term trends are negative.

 

Both the indices have registered a bearish falling gap which will act as a resistance going forward. Sensex has formed a gap between 18358 - 18327 and Nifty between 5521 – 5512. This gap if not filled, may be classified as a Measuring gap. If so, then the downside target for the Sensex will be 17741 and Nifty 5331.

 

Both Sensex and Nifty have closed just above the neckline of the weekly Bearish Head and Shoulders. A weekly close below Sensex 18145 and Nifty 5426 will confirm the breakout for Bearish H & S. This week the neckline has provided the support to both the indices. It will be interesting to see for how long this neckline continues to provide support to the market. If there is a bearish breakout, then the Sensex is likely to find some sort of support at 17320 and Nifty at 5202.

 

As mentioned last week the strong resistance zone formed by the convergence of 200dma, previous intermittent top and 50% retracement of the entire fall i.e. Sensex 19049-19202 and Nifty 5717-5758 proved to be a strong resistance and the market reversed from there. Currently the market is correcting the immediate rise of the Sensex from 17314 to 19131 and Nifty from 5195 to 5740. The correction levels are 18437-18222-18008 for the Sensex and 5532-5467-5403 for the Nifty. Both the indices are currently taking support around the 50% of the current rise.

Majority of the oscillators are in Sell mode. MACD and ROC continues with its Sell signal. RSI is at 42 and has given a Sell signal. Bollinger Band has given a Sell signal on Thursday as the prices have closed below the lower Bollinger Band. Money Flow has fallen to 35 and is in Sell mode suggesting money flowing out of the market. The other lead indicator OBV too has given a Sell signal. Stochastic oscillator is oversold, but is in Sell mode as %K is below %D. ADX has fallen to 16 suggesting that the market is in sideways consolidation mode. The Directional Indicators have given a fresh Sell signal as +DI has moved below –DI. 

Nifty O.I. PCR is low at 1.10. Highest Open Interest build-up is seen at 5700 Call and 5400 Put. It suggests an immediate range for the Nifty between 5400 on the lower side to 5700 on the higher side.

 

The Trendline Resistance for the Sensex is at 18511. The Trendline Support is at 18145.

 

The Trendline Resistance for the Nifty is at 5567. The Trendline Support is at 5426.

 

For the week ahead, Sensex will find Support at 17982-17752-17482 and will find Resistance at 18469-18736-19003.

 

For the week ahead, Nifty will find Support at 5402-5328-5252 and will find Resistance at 5551-5624-5698.

INDEX LEVELS: 

 S3S2S1CLOSER1R2R3
Nifty5252532854025482555156245698
Sensex17482177521798218197184691873619003

LAST WEEKS RECOMMENDATIONS:

All the recommendations achieved their target with the exception of Allahabad Bank. The Star performer of the week was Chambal Fert which went up by 6%. 

STOCKReco. PriceTgtReachedLot SizeProfit
Buy ACC99510311036250Rs.10,250
Buy Pantloon333350364500Rs.15,500
Buy AllhabdBnk2182252221000Rs.4,000
Buy PNB116911921202250Rs.8,250
Buy Chambal8689914000Rs.20,000
    TotalRs.58,000

THIS WEEKS RECOMMENDATIONS:

This week is expected to be very volatile and hence Pair Strategies are suggested. 

PAIR NO.STOCKCMPSLTGT - 1TGT -2
1BuyABGShip388380399412
SellCummins641653618592
2BuyBajajAuto1469145014951523
SellJindalSW865879845823
3Buy Idea949298103
SellWelspunCorp148151143137
  

WATCH OUT FOR:

ABG Shipyard

Cummins

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.

Copyright © 2000 - 2018 Jatin Sanghavi. All rights reserved.
No part of the material on this website may be reproduced or distributed in any forms or by any means, electronics or mechanical without the written permission of the author.
Sitemap