Archives : STRONG RESISTANCE @ NIFTY 6350 - 24/01/2014.

STRONG RESISTANCE @ NIFTY 6350 – 24/01/2014.

CONSOLIDATION WITH A BEARISH BIAS.

As pointed out in the previous week’s article, market continues to trade in a small range of 6130 – 6350 for the Nifty. This week, Nifty once again found the resistance at 6350 very strong and retraced from that level. Hence the level of Nifty 6350 is proving to be a critical level. A strong upward directional move will be seen if that level gets taken out. Right now the consolidation in the trading range continues but with a bearish bias.


STRONG RESISTANCE @ NIFTY 6350 – 24/01/2014.

CONSOLIDATION WITH A BEARISH BIAS.

As pointed out in the previous week’s article, market continues to trade in a small range of 6130 – 6350 for the Nifty. This week, Nifty once again found the resistance at 6350 very strong and retraced from that level. Hence the level of Nifty 6350 is proving to be a critical level. A strong upward directional move will be seen if that level gets taken out. Right now the consolidation in the trading range continues but with a bearish bias.

TECHNICALLY SPEAKING.

Sensex opened the week at 21083, made a high of 21409, low of 21001 and closed the week at 21133. Thus it registered a weekly gain of 70 points. At the same time the Nifty opened the week at 6261, made a high of 6355, low of 6243 and closed the week at 6266. Thus the Nifty closed the week with a small gain of 5 points.

On the daily charts, both Sensex and Nifty have formed a Closing Black body Marubuzo. On the weekly charts both the indices have formed a small white body Spinning Top with a long upper shadow. The long upper shadow is suggestive of the selling seen at higher levels. Thus both daily and weekly pattern suggests a bearish bias in the short term.

A Bearish Rising Wedge formation got completed sometime back and the target as per this formation works out to be Sensex 19706 and Nifty 5841. The target is likely to be achieved as long as the Sensex remains below 21483 and Nifty below 6415.

Last time the market bounced was from the Support zone between Sensex 20651 – 20636 and Nifty 6142 – 6140. This support zone is due to the confluence formed by 61.8% Retracement (Sensex – 20651 and Nifty 6141) of the immediate rise and 38.2% Retracement (Sensex – 20636 and Nifty – 6142) of the intermediate rally.

Correction will resume only if Sensex falls below 20568 and Nifty falls below the low of 6129, and for that the Correction levels will be Sensex 20636-20374-20112 and Nifty 6142-6058-5973.

From a longer term perspective, Market has a strong support zone between Sensex 19444-19264 and Nifty 5738-5688. This is a confluence zone formed by the presence of Bullish Rising Gap between Sensex 19444-19293 and Nifty 5738-5688, intermediate low of Sensex 19264 and Nifty 5700 and the 50% Retracement level which is at Sensex 19385 and Nifty 5730. Thus this is a strong Support Zone and a breach of this support zone will end the current long term uptrend.

This week, both Sensex and Nifty have just closed above the short term average of 20dma (Sensex – 21048 and Nifty – 6259). Both the indices continue to remain above the medium term average of 50dma (Sensex – 20901 and Nifty – 6216) besides already being above the long term average of 200dma (Sensex – 19934 and Nifty – 5957). Thus the trend in the short term, medium term and long term timeframe continues to remain positive.

MACD is positive and continues in Buy mode. RSI (51) has gone down but still continues to remain just above the equilibrium line. ROC is positive and continues with its Buy signal. MFI (60) has gone above the equilibrium line. Stochastic Oscillator has given a fresh Sell signal as %K (82) has gone below %D. ADX is at a low level of 16, suggesting that the market continues in sideways mode. The Directional Indicators continue with its Buy signal as +DI remains above –DI. OBV has started moving higher but still not given a Buy signal. Thus Oscillators are painting a mixed picture.

The Nifty O.I. PCR is at a low of 1.11. For the next month series, highest Open interest build up is at 6000 Put and 6400 Call. This suggests that the market expects a trading range with support coming in at 6000 levels and resistance around 6400 levels. Friday saw strong Call writing at the strike of 6300. Thus one can expect immediate resistance at the level of 6300.

The Trendline Resistance for the Sensex is at 21414. The Trendline Support for the Sensex is at 20664.

The Trendline Resistance for the Nifty is at 6355. The Trendline Support for the Nifty is at 6146.

For the week ahead, Sensex will find Support at 20739-20443-20137 and will find Resistance at 21409-21650-22048.

For the week ahead, Nifty will find Support at 6181-6079-5972 and will find Resistance at 6358-6443-6571.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5972

6079

6181

6266

6358

6443

6571

Sensex

20137

20443

20739

21133

21409

21650

22048

LAST WEEKS RECOMMENDATIONS:

STOCK

Recom @

Target

Reached

Sell Bharti

311

300

302

Sell SunTV

358

348

356

Sell DLF

155

148

152

Sell PFC

146

136

136

Sell JainIrrig

68

65

65

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell PNB

582

594

563

543

Sell TataGlob

144

148

137

130

Sell UBI

116

119

111

106

Sell CESC

419

426

406

392

Sell IDEA

152

156

145

138

WATCH OUT FOR:

Union Bank

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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