Archives : 200DMA HOLD FOR NOW - 28/03/2013.

200DMA HOLDS FOR NOW – 28/03/2013.

A RELIEF RALLY.

As expected the 200dma was tested this week and for the time being that level holds (there was no closing below the 200dma). Does that mean the trend has reversed? The answer is no, it is just a pull-back and it can be expected after such a sharp fall. The pull-back can even last for some more days and the levels for that will be 19193-19386-19579 for the Sensex and 5798-5858-5918 for the Nifty. After that the prior downtrend (short and medium term), will resume. But a breach of the 200dma will not only reverse the long term trend of the market which is bullish, but also open the gates for Nifty 5204.

 


200DMA HOLDS FOR NOW – 28/03/2013.

A RELIEF RALLY.

As expected the 200dma was tested this week and for the time being that level holds (there was no closing below the 200dma). Does that mean the trend has reversed? The answer is no, it is just a pull-back and it can be expected after such a sharp fall. The pull-back can even last for some more days and the levels for that will be 19193-19386-19579 for the Sensex and 5798-5858-5918 for the Nifty. After that the prior downtrend (short and medium term), will resume. But a breach of the 200dma will not only reverse the long term trend of the market which is bullish, but also open the gates for Nifty 5204.

TECHNICALLY SPEAKING. 

Sensex opened the week at 18894, made a high of 18950, low of 18568 and closed the week at 18835. Thus it registered a weekly gain of 100 points. At the same time the Nifty opened the week at 5707, made a high of 5718, low of 5604 and closed the week at 5682. Thus the Nifty went up by 32 points on a weekly basis.

It was a short week where Thursday was not only the last day of the week, but also the last day for March series and the financial year. Some short covering was observed and as a result of that, both Sensex and Nifty have formed a big white body candle on the daily charts which has a slightly long lower shadow. This is a bullish formation. On the weekly charts both the indices have formed a small black body candle with a long lower shadow. If we consider the formation of the last two weeks then it is a bullish reversal pattern called Homing Pigeon but it needs a confirmation. Thus a real white body candle in the next week will confirm the reversal.

The indices continue to be below the short term average of 20dma (Sensex – 19132 and Nifty – 5777) and the medium term average of 50dma (Sensex – 19464 and Nifty – 5886). But this week both the indices successfully tested the long term average of 200dma (Sensex – 18557 and Nifty – 5627) and still continue above it. Thus the trend in the short term and medium term is bearish, while that in the long term timeframe continues to remain bullish.

Both the indices have bounced from a low of Sensex 18568 and Nifty 5604. A Relief rally has started and will be in place till the above mentioned lows are intact. The retracement levels will be 19193-19386-19579 for the Sensex and 5798-5858-5918 for the Nifty.

Both the indices had bounced back from Sensex 18255 and Nifty 5548 forming intermittent lows, which are within the Bullish Rising Gap between Sensex 18062-18284 and Nifty 5447-5526. This gap has acted as a strong support for the market even before as the Sensex had bounced back from a low 18291 and Nifty 5534. This gap holds more significance because a breach of this gap will signal the end of the current rally.

If we consider the entire rally from low of Sensex 15135 and Nifty 4531 to a high of Sensex 20203 and Nifty 6111, then the retracement levels for the Sensex will be 18267-17669-17071 and 5507-5321-5134 for the Nifty.

Thus the 38.2% Retracement level i.e. Sensex 18267 and Nifty 5507 is very close to starting point of the Bullish Rising Gap (Sensex 18284 and Nifty 5526) and their intermittent lows (Sensex 18255 and Nifty 5548), thus forming a strong support zone between Sensex 18284 - 18255 and Nifty 5548 - 5507.

Both Sensex and Nifty had completed a Bearish Head and Shoulders pattern, the targets for which were Sensex 18519 and Nifty 5519. But two weeks back, both the indices have formed a larger Bearish Head and Shoulders pattern and the targets according to this pattern are Sensex 17250 and Nifty 5204. This is secondary pattern which has evolved from the smaller primary Head and Shoulders pattern. If Sensex were to close above 19754 and Nifty above 5971, then both Bearish Head and Shoulders patterns will stand negated.

On the weekly charts, both the indices had previously completed a Flag formation and the target according to the pattern comes in at Sensex 21024 and Nifty 6415. The targets will be achieved as long as the Sensex remains above 18255 and Nifty 5548. If we take the Saucer formation which is due to the fall from Sensex 18523 to 15748 and Nifty 5629 to 4770, then the target comes in at Sensex 21298 and Nifty 6488. Hence we have a Target zone of 21024 - 21298 on the Sensex and 6415 - 6488 on the Nifty.

MACD continues with its Sell signal besides being negative. ROC too is negative and continues with its Sell signal. RSI (39) too continues to show increase in bearish momentum. Stochastic Oscillator has given a fresh Buy signal as %K (11) has just gone above %D, besides being oversold. MFI (44) has gone below the centerline and signals a money outflow. ADX has moved higher to 27, suggesting that the current down trend is now strong. The Directional Indicators continue in a Sell mode +DI continues to be below -DI. OBV continues in Sell mode besides making a lower top lower bottom formation. Majority of the Oscillators are suggesting bearishness to continue in the short term except for Stochastic Oscillator which is suggesting a short term pull-back.

The Nifty O.I. PCR is at 1.16. For the April series, highest Open interest build up is seen at 5600 Put and 5900 Call. This suggests that the market expects a trading range for the Nifty with support at 5600 and resistance around 5900 levels. Surprisingly the 5700 Call also added lot of open interest on Thursday, which suggests that this level will prove to be a short term resistance.

Trendline Support for the Sensex is at 18250. Trendline Resistance for the Sensex is at 19535.

Trendline Support for the Nifty is at 5609. Trendline Resistance for the Nifty falls at 5910.

For the week ahead, Sensex will find Support at 18523-18255-17972 and will find Resistance at 19137-19411-19754.

For the week ahead, Nifty will find Support at 5593-5499-5393 and will find Resistance at 5777-5863-5971.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5393

5499

5593

5682

5777

5863

5971

Sensex

17972

18255

18523

18835

19137

19411

19754

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Target

Reached

Sell ICICI

1028

996

1002

Sell IOC

290

272

270

Sell HDFCBnk

605

591

602

Sell TataComm

213

206

208

Sell TataMtrDvr

155

150

153

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy TCS

1575

1556

1604

1634

Buy Lupin

628

616

646

665

Buy TechMah

1059

1035

1086

1124

Buy ITC

309

305

315

322

Buy HindZinc

121

118

126

132

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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