Archives : NIFTY TAKES SUPPORT @ 200DMA - 09/03/2012.

NIFTY TAKES SUPPORT @ 200DMA 09/03/2012.

RETEST OF THE SUPPORT.

As expected the support zone between 5210 – 5167 worked for the market as the Nifty bounced back exactly from there. The support zone was a result of the confluence of the 38.2% Retracement of the current rise, the 200dma and the Falling Channel Top. Many times after such a bullish breakout, Market has a tendency to retest the breakout line, as was the case here. In the process it validates the breakout and establishes a higher Bottom. If the Nifty closes above 5454, then one can expect the Nifty to cross the previous intermittent high of 5629.

 

 

  

NIFTY TAKES SUPPORT @ 200DMA – 09/03/2012.

RETEST OF THE SUPPORT.

As expected the support zone between 5210 – 5167 worked for the market as the Nifty bounced back exactly from there. The support zone was a result of the confluence of the 38.2% Retracement of the current rise, the 200dma and the Falling Channel Top. Many times after such a bullish breakout, Market has a tendency to retest the breakout line, as was the case here. In the process it validates the breakout and establishes a higher Bottom. If the Nifty closes above 5454, then one can expect the Nifty to cross the previous intermittent high of 5629.

TECHNICALLY SPEAKING. 

Sensex opened the week at 17598, made a high of 17691, low of 17008 and closed the week at 17503. Thus it registered a weekly loss of 133 points. At the same time the Nifty opened the week at 5342, made a high of 5382, low of 5171 and closed the week at 5333. Thus the Nifty fell by 26 points on a weekly basis.

 

Both Sensex and Nifty have formed a Bullish Opening White body Marubuzo on Friday but the size of the body is not so big and as a result the three day candlestick formation fails to form a Bullish Morning Star Reversal pattern. On the weekly charts, Nifty has formed a Bullish Doji which has a long lower shadow whereas the Sensex has formed a small black body candle with a long lower shadow. Both the formations are neutral but since they occur in downtrend we can expect them to have bullish implications. The bullishness will be confirmed if we have a big white body candle formation for the next week.

 

On Friday, both the indices registered a Bullish Upward Gap from 17239 to 17325 for the Sensex and 5243 to 5291 for the Nifty. This gap can be referred to as Bullish Breakaway gap as it is marking the beginning of a rally. This gap will not only act as a strong support but will also continuously fuel the upward rally.

 

Both the indices are below the short term average of 20dma (Sensex – 17778 and Nifty – 5399) and as a result the short term trend remains Bearish. But the indices still continue to remain above the crucial level of 200dma (Sensex – 17164 and Nifty – 5163) and also above their medium term average of 50dma (Sensex – 17081 and Nifty – 5163). As a result, the trend in the Short term timeframe is Bearish but the trend in the Medium term timeframe and Long term timeframe continue to be Bullish.

 

The market was undergoing a correction before it took support this week at Sensex 17008 and Nifty 5171. If this support is breached then the correction will resume and then the market will once again correct the entire rise from Sensex 15135 to 18523 and Nifty from 4531 to 5629 and the Correction levels will be 17229-16829-16429 for the Sensex and 5210-5080-4950 for the Nifty.

 

The correction will be deemed complete if the Sensex moves above the levels of 17587-17766-17945 and Nifty 5346-5400-5454. Once the Sensex closes above 17945 and Nifty 5454, the indices will head towards their previous intermittent top i.e. Sensex 18523 and Nifty 5629.

 

The market corrected exactly upto the level of the Falling Channel Top which acted as a Support. As is the case many times, the market after a strong breakout came back to retest the breakout level and in the process formed a higher bottom. The overall bullish target for Falling Channel pattern breakout remains intact. The targets as per this formation are Sensex 20383 and Nifty 6148.

 

A strong support is likely to emerge between Sensex 17164 – 17008 and Nifty 5171-5163 which is a result of confluence of immediate current bottom, critical level of 200dma and 50dma besides the Falling Channel Top.

 

MACD and ROC continue with their Sell signals for this week too, but MACD is still in positive territory, while ROC is in negative zone. RSI continues to hover around the equilibrium line and has moved to 51, signaling a Buy once again. Stochastic Oscillator (%K) is oversold as it has moved lower down to 16 but is in Buy mode as %K has moved above %D. ADX has now reduced further to 27 suggesting that the uptrend has lost lot of its strength. Directional Indicators are in Sell mode as +DI is below –DI. MFI has given a Sell signal as it fell below the centerline and is at 37. OBV has gone in Sell mode as it has started making a lower top lower bottom formation.

Nifty O.I. PCR is now at a reasonable 1.21. Highest open interest buildup is seen at 5200 Put. High Call writing is seen at the strike of 5600. It shows that traders are building up their positions expecting the trading range for the market to be 5200 on the lower side and 5600 on the higher side in the days to come. Friday saw a very high amount of Put writing at 5300 strike. Thus it is likely that the level of 5300 will provide strong support in the immediate future.

Trendline Resistance for the Sensex is at 18471. The Trendline Support for the Sensex is at 17160. 

Trendline Resistance for the Nifty is at 5620. The Trendline Support for the Nifty falls at 5164.

For the week ahead, Sensex will find Support at 17211-16928-16668 and will find Resistance at 17890-18280-18672.

For the week ahead, Nifty will find Support at 5243-5160-5076 and will find Resistance at 5443-5551-5653.

 

INDEX LEVELS:

.

 S3S2S1CLOSER1R2R3
Nifty5076516052435333544355515653
Sensex16668169281721117503178901828018672

LAST WEEKS RECOMMENDATIONS:

Last week only Aurobindo Pharma and Castrol reached their targets while the rest could not.  

STOCKReco. PriceTgtReachedLot SizeProfit
SunPh566579576500Rs. 5,000
AuroPh1201251252000Rs. 10,000
IndusInd3163243201000Rs. 4,000
Dabur1051081074000Rs. 8,000
Castrol490515518500Rs.14,000
    TotalRs. 41,000

THIS WEEKS RECOMMENDATIONS: 

STOCKCMPSLTgt-1Tgt-2
Buy Cairn375369384394
Buy Polaris169165176184
Buy IDBI111109115120
Buy OptoCkt271264281293
Buy CentrlBk102100106111

WATCH OUT FOR:

POLARIS

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