Archives : TESTING TIME FOR TRADERS - 22/05/2015.

TESTING TIME FOR TRADERS - 22/05/2015. 

SHORT TERM TREND TURNS POSITIVE.

Last two weeks presented a difficult time for Traders as the market grapples with the trend. The pull-back continued for this week and as a result the indices have managed a close above the short term resistance zone. Even though the short term trend has been reclaimed by the bulls, there remains a question mark regarding the continuation of the correction. As long as Nifty remains below 8690, the current rally will be viewed as a pull-back rally and not as a resumption of long term uptrend.

 

 


TESTING TIME FOR TRADERS - 22/05/2015. 

SHORT TERM TREND TURNS POSITIVE.

Last two weeks presented a difficult time for Traders as the market grapples with the trend. The pull-back continued for this week and as a result the indices have managed a close above the short term resistance zone. Even though the short term trend has been reclaimed by the bulls, there remains a question mark regarding the continuation of the correction. As long as Nifty remains below 8690, the current rally will be viewed as a pull-back rally and not as a resumption of long term uptrend.

TECHNICALLY SPEAKING.

Sensex opened the week at 27416, made a high of 28071, low of 27370 and closed the week at 27957. Thus it closed the week with a gain of 633 points. At the same time the Nifty opened the week at 8284, made a high of 8489, low of 8271 and closed the week at 8458. Thus the Nifty closed the week with a gain of 196 points.

On the daily charts, both the indices have formed a small white body candle on Friday. Both Sensex and Nifty have been making small body candles in the past four days while progressing higher. On the weekly charts, both the indices have formed a real white body candle. As a result, weekly candlestick formation suggests a bullish bias in the near term.

Currently the market is witnessing a pull-back of the immediate fall from Sensex 29094 to 26423 and Nifty from 8844 to 7997 and the relevant pull-back levels are placed at Sensex 27444-27759-28074 and Nifty 8320-8420-8521. If we consider the entire fall from 30024 for the Sensex and 9119 for the Nifty, then the correction levels are 27799-28224-28649 for the Sensex and 8425-8558-8690 for the Nifty. Hence the long term uptrend will resume once Sensex manages to stay above 28649 and Nifty above 8690.

This week both the indices managed to reclaim both the long term average of 200dma (Sensex – 27638 and Nifty – 8317) and even the short term average of 20dma (Sensex – 27335 and Nifty – 8272). However, both the indices have just stopped near the medium term average of 50dma (Sensex – 27944 and Nifty – 8471). Thus the trend in the short term and long term timeframe has turned up whereas the trend in the medium term timeframe continues to remain down. 

Bearish pattern formations still remain intact and hence one can still expect indices to achieve the target of Bearish Rising Wedge pattern which falls at 26049 for the Sensex and 7882 for the Nifty. Besides this, both the Sensex and Nifty had also completed an Ascending Broadening pattern and the target for that pattern is at Sensex 25034 and Nifty 7533. Coupled with this, both the indices have also completed a Head and Shoulders pattern and the target as per this pattern is at Sensex 24486 and Nifty 7425.

MACD and Price ROC continue with their Buy signal. RSI (55) has moved higher, suggesting bullish momentum. Stochastic Oscillator %K (94) is above %D, thereby continuing with its Buy signal. MFI (69) suggests positive money flow. OBV continues to make lower top lower bottom formation. ADX has decreased to 20, suggesting that the current downtrend has lost a lot of strength. Directional Indicators have given a Buy signal as +DI has gone above –DI. Thus Oscillators are suggesting a bullish bias.

Options data indicates highest Call Open Interest buildup at the strike of 8500 and highest Put build-up is at the strike of 8300. Thus Option data suggests a trading range with support coming in at 8300 and resistance around 8500.

Trendline Resistance for the Sensex is at 28119.

Trendline Resistance for the Nifty falls at 8560.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8185

8269

8355

8458

8570

8669

8774

Sensex

26897

27248

27603

27957

28384

28693

29094

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Sell TCS

2511

2430

2496

125

Rs. 1,875

Sell ACC

1472

1426

1471

250

Rs. 250

Sell JsWSt

876

835

863

250

Rs. 3,250

Havells

271

261

265

1000

Rs. 6,000

Sell REC

295

285

293

1000

Rs. 2,000

Total

Rs.13,375.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy ABB

1397

1371

1436

1477

Buy CMC

2027

1990

2083

2141

Buy TataElxsi

1233

1195

1290

1349

Buy AmaraRaj

867

850

892

918

Buy KtKBank

131

128

137

143

WATCH OUT FOR:

Karnataka 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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