Archives : THRUSTING PATTERN ON WEEKLY CHARTS - 23/12/2011.

THRUSTING PATTERN ON WEEKLY CHARTS   23/12/2011.

RESISTANCE @ 200 WEEK MOVING AVERAGE.

Bulls had finally something to cheer as the indices posted weekly gains and formed small white body candles. But the weekly study clearly indicates that it is a Bearish Continuation pattern called Thrusting. Both the indices found strong resistance at the 200 Weeks Moving Average on Friday (Sensex - 15885 and Nifty - 4769). Any pull-back will have to close above this level if there has to be a more meaningful rally.

 

 


THRUSTING PATTERN ON WEEKLY CHARTS   23/12/2011.

RESISTANCE @ 200 WEEK MOVING AVERAGE.

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Bulls had finally something to cheer as the indices posted weekly gains and formed small white body candles. But the weekly study clearly indicates that it is a Bearish Continuation pattern called Thrusting. Both the indices found strong resistance at the 200 Weeks Moving Average on Friday (Sensex - 15885 and Nifty - 4769). Any pull-back will have to close above this level if there has to be a more meaningful rally.

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TECHNICALLY SPEAKING.

The Sensex opened the week at 15440, made a high of 15911, a low of 15135 and closed the week at 15738. The Sensex gained 247 points on a weekly basis. Similarly Nifty opened the week at 4623, made a high of 4763, a low of 4531 and closed the week at 4714. The Nifty too closed with a weekly gain of 63 points.

It was an interesting week as far as the candlestick patterns were concerned as two back to back Bullish Reversal patterns were negated before the third one held its ground. On Monday, the market required a white body candle for confirmation of Last Engulfing Bottom, but that was not to be. On the contrary, there was a Hammer formation with a black body which once again signaled a Bullish Reversal. The market was in no mood to oblige the bulls and went below the low of the Hammer. In the process it negated the bullishness of the Hammer and formed a big black body candle. On Wednesday, the bulls once again tried and formed a two day Bullish Reversal pattern called Kicking. Now this pattern holds good and has signaled a Bullish Price Reversal in the very short term time frame. The formation of a small black body candle on Friday, will not affect the Bullish Price Reversal. On the weekly charts there is a small white body candle formed, which is a part of two day Bearish Continuation pattern called Thrusting. Hence we have conflicting pattern study on the daily timeframe charts and weekly charts. One can expect the market to move up in the very short term but the weekly bearishness will catch up with the market at higher levels.

Short term, Medium term and Long term Trends continue to be down. Both Sensex and Nifty are below their short term average of 20dma (Sensex – 16030 and Nifty – 4806), medium term average of 50dma (Sensex – 16578 and Nifty – 4978) and long term average of 200dma (Sensex – 17645 and Nifty – 5298). As a result the Short term, Medium term and Long term trend continue to be bearish. Besides this, both the indices have once again closed below their 200 Weeks moving average (Sensex – 15885 and Nifty – 4769).

If the indices manage a close above the 200 Weeks moving average then the pull-back will gather strength. We will have to atleast consider the pull-back of the current fall i.e. Sensex 17003 to 15135 and Nifty 5099 to 4531. The pull-back levels will be 15849-16069-16289 for the Sensex and 4748-4815-4882 for the Nifty.

For more than a year, both the indices have been moving lower in a Falling Channel. In case of the indices breaching their recent lows, the market will fall to test the lower end of the Falling Channel, which should act as support. The support levels are at Sensex 14793 and Nifty 4434. The top end of the channel will provide resistance, is at Sensex 17630 and Nifty 5331. On a longer term timeframe the Bearish Head & Shoulders and Bearish Descending Triangle on the weekly charts still stand, and so do their targets. The target for the Bearish Head and Shoulders pattern on the weekly charts stands at Sensex 14651-13928 and Nifty 4357-4143. This target holds true as long as the Nifty stays below 5740.

Both Sensex and Nifty have formed another huge Bearish Head & Shoulders pattern on the weekly charts. Despite forming a small white body candle on the weekly charts, the weekly closing is still below the neckline of Sensex – 15790 and Nifty – 4721. It is quite scary but the targets for this bearish pattern are Sensex 10387 and Nifty 3080. This pattern is a derived pattern which has been completed even as the market is on the verge of achieving the targets of primary distribution pattern of Bearish Head & Shoulders and Bearish Descending Triangle as discussed in the above paragraph.

The market is correcting the entire rise from 7697 to 21108 for the Sensex and 2252 to 6338 for the Nifty. The market has already breached and is below the 38.2% of the above mentioned rise and hence it is likely to move towards the next Fibonacci Retracement levels of 50% and 61.8% levels of the entire fall for the Sensex and Nifty. Those levels are 14402-12820 for the Sensex and 4295-3813 for the Nifty.

The Golden Ratio Target of the current rise of Sensex from 15765 to 17908 and Nifty from 4720 to 5399, falls at Sensex 14440 and Nifty 4300. This level coincides with the 50% Retracement level of the entire rise (Sensex – 14402 and Nifty – 4295) and hence we have a confluence zone between Sensex 14440-14402 and Nifty 4300-4295. This zone will act as strong support for both the indices.

Majority of oscillators continue to be bearish. MACD and ROC are in negative territory and continue with their Sell signal. RSI continues in its Sell mode as it is below the centerline at 43. Stochastic Oscillator is in Buy mode as %K is above %D. Directional Indicators are in Sell mode as +DI is below –DI. ADX has improved and is at 25. It suggests the downtrend has strength. MFI has moved higher upto 44 but still continues to be in Sell mode. OBV continues with its lower top, lower bottom formation. Thus OBV too continues with its Sell mode. The only silver lining is the Positive Divergence seen in RSI and MFI. Positive Divergence indicates that there might be some accumulation at lower levels, but that is not a signal to buy.

Nifty OI PCR is at a low level at 0.96. For the Jan Series, highest Open Interest has been added at 4500 Put. Highest Call writing is seen at 5100 strike. Hence one can expect Nifty to find some support at 4500. On the higher side, resistance will be at 5100. 

Trendline Resistance for the Sensex is at 16531. Trendline Support is at 14874.

Trendline Resistance for the Nifty is at 4939. Trendline Support falls at 4450.

For the week ahead, Sensex will find Support at 15478-15135-14793 and will find Resistance at 16068-16408-16756.

For the week ahead, Nifty will find Support at 4623-4531-4448 and will find Resistance at 4818-4919-5011.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

4448

4531

4623

4714

4818

4919

5011

Sensex

14793

15135

15478

15738

16068

16408

16756

LAST WEEKS RECOMMENDATIONS:

It was a super week as all the stocks reached their targets with ease. The Star Performers of the week were Bank Of Baroda and Hero Motocorp which fell by around 10% and 8% resp.  

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Sell LiCHsg

215

209

208

1000

Rs.7,000

Sell GMDC

165

154

151

2000

Rs.28,000

Sell HeroMot

1925

1827

1764

250

Rs.40,250

Sell BoB

704

671

631

250

Rs.18,250

Sell BomDye

350

337

336

1000

Rs.14,000

Total

Rs.1,07,500

THIS WEEKS RECOMMENDATIONS: 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Grasim

2456

2432

2490

2526

Buy SunTV

291

286

298

305

Buy AdaniEnt

321

316

329

338

Buy Bhushan

310

305

317

325

Buy UTVSoft

993

980

1011

1030

WATCH OUT FOR:

Grasim
.

Sun TV

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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