Archives : MONTHLY BULLISH ENGULFING - 29/06/2012

MONTHLY BULLISH ENGULFING – 29/06/2012.

RESISTANCE ZONE BREACHED.

The first day of the July series was surprisingly bullish after two weeks of sideways consolidation. The consolidation was a signal that the market was digesting disappointments on the news front quite well. But this week there was positive news not only on the global front but also on the local front. With PM Dr. Manmohan Singh taking over the Finance Ministry, the Government is now keen on pushing the Pension and Insurance reforms with renewed energy without any further delay. The bullishness was further boosted by the positive announcements made by the EU to ease the sovereign debt crisis. As a result the market took the next step forward by breaking the Resistance zone of Sensex 17109-17136 and Nifty 5190-5200 quite easily.

   


MONTHLY BULLISH ENGULFING – 29/06/2012.

RESISTANCE ZONE BREACHED.

The first day of the July series was surprisingly bullish after two weeks of sideways consolidation. The consolidation was a signal that the market was digesting disappointments on the news front quite well. But this week there was positive news not only on the global front but also on the local front. With PM Dr. Manmohan Singh taking over the Finance Ministry, the Government is now keen on pushing the Pension and Insurance reforms with renewed energy without any further delay. The bullishness was further boosted by the positive announcements made by the EU to ease the sovereign debt crisis. As a result the market took the next step forward by breaking the Resistance zone of Sensex 17109-17136 and Nifty 5190-5200 quite easily.

TECHNICALLY SPEAKING. 

Sensex opened the week at 17038, made a high of 17448, low of 16815 and closed the week at 17429. Thus it registered a strong weekly gain of 457 points. At the same time the Nifty opened the week at 5158, made a high of 5286, low of 5095 and closed the week at 5278. Thus the Nifty went up by 132 points on a weekly basis.

Two weeks back both the indices had made a big black body candle which resulted in a short term trading range getting developed between Sensex 17109 - 16636 and Nifty 5190 - 5041. Finally a breakout was witnessed this Friday when both Sensex and Nifty opened with a gap up at the Resistance and continued to move higher, forming an Opening White body Marubuzo which is a bullish candlestick pattern.  On the weekly charts too there is a big white body candle almost like a Closing White body Marubuzo. Interestingly the monthly chart has seen a Bullish Engulfing pattern being formed. Thus the daily, weekly and monthly charts are suggesting continuation of bullishness.

For the first time since February 2012, both Sensex and Nifty have broken the lower top lower bottom formation as the Sensex crossed the level of 17432 and Nifty 5279. Also on Friday, both the indices have left behind a Bullish Rising Gap between Sensex 17134-17033 and Nifty 5189-5159. There is a high probability that this may turn out to be Bullish Breakaway Gap. Hence in the near term, one can expect support at this gap i.e. between Sensex 17134-17033 and Nifty 5189-5159.

After making an intermittent low of Sensex 15748 and Nifty 4770, the markets are witnessing a strong pull-back. The Pull-back or Retracement levels are at 16808-17136-17463 for the Sensex and 5098-5200-5301 for the Nifty. Sensex is already near the 61.8% Retracement level, hence it is necessary to look at the pull-back levels of the entire fall from Sensex 21108 to 15135 and Nifty from 6338 to 4531. The pull-back levels for that are 17417-18122-18827 for the Sensex and 5221-5434-5648 for the Nifty.

Both Sensex and Nifty are above the long term average of 200dma (Sensex – 16809 and Nifty – 5077). Also the indices are comfortably above the medium term average of 50dma (Sensex – 16648 and Nifty – 5045) and the short term average of 20dma (Sensex – 16775 and Nifty – 5085). As a result, the trend in the Long term timeframe, Medium term timeframe and the Short term timeframe continue to be all Bullish.

Both Sensex and Nifty had given a bearish breakout for the Falling Wedge pattern. The target as per this breakout falls at Sensex 15728 and Nifty 4742. The lows registered three weeks back (Sensex 15748 and Nifty 4770) are very close to immediate target of the Falling Wedge pattern; hence the immediate target has been achieved. The long term target now stands negated as the Sensex has crossed 17432 and Nifty 5279.

Market is now well above the level of the Falling Channel Top which comes in at Sensex 16209 and Nifty 4905. These levels should now provide Support for the market. The overall bullish long term target for Falling Channel pattern breakout remains intact. The targets as per this formation are Sensex 20383 and Nifty 6148.

There is a strong Support zone between Sensex 16775 – 16809 and Nifty 5077 – 5093, formed by the confluence of the Tweezer bottom formed at Sensex 16799 and Nifty 5093 and the 200dma aided with 20dma which all are close to each other. Nifty is already in the Resistance zone between 5279-5301 which has been formed by the 61.8% of the immediate fall (Nifty from 5629 to 4770) and the previous intermittent top (5279). For further upward movement to continue it is necessary for the Nifty to close above 5301.

MACD and ROC both continue in their Buy mode and are in positive territory. RSI is moving higher and is at 67, suggesting that the bullish momentum is likely to continue. Stochastic Oscillator has given a Buy as %K is above %D, but since %K is at 83; the oscillator is in overbought territory. MFI (66) continues with its Buy mode and so does the Directional Indicators as +DI is above –DI. ADX has improved and is at 23 which suggest that a trend is being developed. OBV is already in Buy mode making higher top, higher bottom formation. Bollinger Band too, continues in its Buy mode. Daryl Guppy, which is a medium to long term indicator, has also given a Buy signal this week.

The Nifty O.I. PCR is at 1.53 which suggests that there is scope for it to move higher. The confidence of Put writers has increased over that of the Call writers. For the July series, highest open interest buildup is seen at 5000 Put followed by 4800 Put. Very high Open Interest has been added to the 5400 Call. Thus the Nifty is likely to range between 5000 on the lower side to 5400 on the higher side, in the immediate future. 

Trendline Resistance for the Sensex is at 17786. The Trendline Support for the Sensex is at 16895.

Trendline Resistance for the Nifty is at 5428. The Trendline Support for the Nifty falls at 5120.

For the week ahead, Sensex will find Support at 17109-16799-16485 and will find Resistance at 17786-18160-18523.

For the week ahead, Nifty will find Support at 5189-5093-4994 and will find Resistance at 5394-5512-5629.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

4994

5093

5189

5278

5394

5512

5629

Sensex

16485

16799

17109

17429

17786

18160

18523

LAST WEEKS RECOMMENDATIONS:

It was a Super week as all the recommendations did well and reached their targets with ease. However the Star Performer of the week was Sobha Developers which went up by around 8%. 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

BomDye

512

527

540

500

Rs.14,000

Buy Sobha

327

344

354

1000

Rs.27,000

AndhBnk

119

123

125

2000

Rs.12,000

Buy BGR

299

306

308

1000

Rs. 9,000

RPower

102

106

108

2000

Rs.12,000

Total

Rs.74,000

THIS WEEKS RECOMMENDATIONS:  

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy OFSS

2537

2483

2625

2718

Buy Siemens

733

724

749

767

Buy Kotak

592

584

605

619

Buy IDFC

136

134

141

146

Buy Delta

66

64

70

75

WATCH OUT FOR:

Delta

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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