Archives : MARKET PULLS BACK; BUT STILL NOT OUT OF THE WOODS - 18/07/2014.

MARKET PULLS BACK; BUT STILL NOT OUT OF THE WOODS –  18/07/2014.

SUPPORT LEVEL HOLDS.

Sensex bounced back from a low of 24892, just above the support of an intermediate bottom of 24878. Thus this Support at 24878 holds great significance and the Correction will resume only if this Support gets breached. But the question mark still remains about the resumption of Uptrend as the Weekly Bearish Engulfing completed last week has still not been negated. This will get negated only if Sensex closes above 26190 and Nifty above 7808.

 

 


MARKET PULLS BACK; BUT STILL NOT OUT OF THE WOODS –  18/07/2014.

SUPPORT LEVEL HOLDS.

Sensex bounced back from a low of 24892, just above the support of an intermediate bottom of 24878. Thus this Support at 24878 holds great significance and the Correction will resume only if this Support gets breached. But the question mark still remains about the resumption of Uptrend as the Weekly Bearish Engulfing completed last week has still not been negated. This will get negated only if Sensex closes above 26190 and Nifty above 7808.

TECHNICALLY SPEAKING.

Sensex opened the week at 25093, made a high of 25713, low of 24892 and closed the week at 25641. Thus it closed the week with a gain of 617 points. At the same time the Nifty opened the week at 7469, made a high of 7685, low of 7422 and closed the week at 7663. Thus the Nifty closed the week with a gain of 204 points.

Both the indices have completed a Bullish Harami on the weekly charts. But a Bullish Harami pattern can form at the bottom and not at the top of a trend; hence that cannot be the case here. So the follow up to the Bearish Engulfing which got completed a week before, was missing as this week formed a white body candle. Thus the bearish impact of the Bearish Engulfing will be negated only when both the indices close above the top of this pattern which is above Sensex 26190 and Nifty 7808. Also both the indices formed a small white body candle on the daily charts in line with the ongoing pull-back. Thus Candlestick pattern study indicates turbulence in the short term.

Correction will resume only if Sensex closes below the level of 24878. If that is to happen, one needs to consider the rally from low of Sensex 22277 and Nifty 6628. The relevant Correction levels are 24695-24233-23771 for the Sensex and 7361-7223-7085 for the Nifty. On a higher timeframe, we need to consider the rally from low of Sensex 19963 and Nifty 5933. The relevant Correction levels are thus placed at Sensex 23811-23076-22341 and Nifty 7092-6871-6649.

The 38.2% Retracement level of the immediate correction (Sensex 24695 and Nifty 7361) and an intermediate bottom (Sensex – 24644 and Nifty 7360) are forming a confluence zone. Thus Sensex 24695-24644 and Nifty 7361-7360 will act as strong Support zone. A breach of this Support zone will turn the medium term trend down.

On a higher scale, a very strong Support zone is formed between Sensex 23811-23729 and Nifty 7092-7067. This is a result of confluence of 38.2% Retracement of the higher rally (Sensex – 23811 and Nifty 7092), 61.8% Retracement of the immediate rally (Sensex – 23771 and Nifty 7085) and the start of the intermediate Bullish Rising Gap (Sensex 23729 and Nifty 7067). The long term trend will continue to remain bullish as long as this Support zone is held.

Last week, both Sensex and Nifty completed a Bearish Rising Wedge pattern when Sensex closed below 25450. This is a leading Bearish Reversal pattern which suggests that the Sensex is now headed towards a target of 24231 and Nifty 7180. This target is still intact and will remain valid till Sensex remains below 26190 and Nifty below 7808.

This week both Sensex and Nifty once again reclaimed the short term average of 20dma (Sensex – 25447 and Nifty – 7600). Besides, they both continue to remain above the medium term average of 50dma (Sensex – 25021 and Nifty – 7472) and the long term average of 200dma (Sensex – 22119 and Nifty – 6592). Thus the trend in the short term timeframe has turned bullish, while that in the medium term and the long term timeframe continues to remain up.

MACD and ROC both continue in Sell mode. RSI (58) has moved above the equilibrium line and hence indicates bullish momentum. Stochastic Oscillator also continues in Buy mode as %K (57) is above %D. The MFI (53) has also turned positive by moving above the centerline, suggesting positive money flow. OBV continues in Sell mode by forming lower top lower bottom formation. ADX has reduced to 30, indicating the uptrend is still intact but its strength has reduced. At the same time Directional Indicators continue to remain in Buy mode as +DI remains above –DI. Thus Oscillators are giving mixed signals; hence expect volatility in the short term.

Options data suggests that the market is expecting a trading range between 7500 and 7800. Friday saw strong buildup at 7700 Call which indicates strong resistance there.

For the week ahead, Sensex will find Support at 25347-24892-24587 and will find Resistance at 25999-26264-26587.

For the week ahead, Nifty will find Support at 7563-7441-7360 and will find Resistance at 7755-7860-7974.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7360

7441

7563

7663

7755

7860

7974

Sensex

24587

24892

25347

25641

25999

26264

26587

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Sell SBI

2425

2364

2366

125

Rs.7,375

Sell Siemens

855

826

841

500

Rs.7,000

Sell HPCL

377

352

372

1000

Rs.5,000

SyndicateBk

142

136

138

2000

Rs.8,000

Sell Ambuja

214

208

212

2000

Rs.4,000

Total

Rs.31,375

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Petronet

186

181

194

203

Buy AxisBnk

1995

1963

2041

2089

Buy ABNuvo

1428

1400

1470

1515

Buy IDFC

163

158

171

180

Buy ApolloHosp

1086

1065

1118

1152

WATCH OUT FOR:

PetronetLNG

Noida Toll

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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