Archives : TRENDS IN CONFLICT - 29 /05/2015.

TRENDS IN CONFLICT - 29/05/2015. 

DOWNTREND LOSING STRENGTH.

After sliding for the last three days, market recovered on Friday and made a big white body candle. But that does not reduce the uncertainty in the market as the trends are still not in unison. The short term trend has turned up but the medium term trend still remains down. As a result, the Average Directional Movement Index indicates that the downtrend has lost its strength. Whenever its value goes below 20, it indicates a difficult time for traders. Long term uptrend will resume only if Nifty closes above 8690.

 

Please Note that there will not be weekly updates dated 05/06/2015 and 12/06/2015. Next weekly update on 19/06/2015. Inconvenience caused is regretted.

 


TRENDS IN CONFLICT - 29/05/2015. 

DOWNTREND LOSING STRENGTH.

After sliding for the last three days, market recovered on Friday and made a big white body candle. But that does not reduce the uncertainty in the market as the trends are still not in unison. The short term trend has turned up but the medium term trend still remains down. As a result, the Average Directional Movement Index indicates that the downtrend has lost its strength. Whenever its value goes below 20, it indicates a difficult time for traders. Long term uptrend will resume only if Nifty closes above 8690.

TECHNICALLY SPEAKING.

Sensex opened the week at 27893, made a high of 27903, low of 27354 and closed the week at 27828. Thus it closed the week with a loss of 129 points. At the same time the Nifty opened the week at 8438, made a high of 8443, low of 8270 and closed the week at 8433. Thus the Nifty closed the week with a loss of 25 points.

On the daily charts, both the indices have formed a big white body candle on Friday after moving lower for the last three days. On the weekly charts, both the indices have formed a Dragon Fly Doji. But considering last two weeks candles, it is a Bearish Harami Cross. This pattern requires a confirmation in form of a bearish candle next week. Thus daily candlestick pattern suggests more bullishness as compared to the weekly pattern.

The market is witnessing a pull-back of the entire fall from Sensex 30024 and Nifty 9119 and the relevant 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 close above both the long term average of 200dma (Sensex – 27676 and Nifty – 8332) and even the short term average of 20dma (Sensex – 27426 and Nifty – 8300). However, both the indices have just stopped below the medium term average of 50dma (Sensex – 27841 and Nifty – 8437). 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 (54) suggests bullish momentum. Stochastic Oscillator %K (68) has just gone above %D, thereby signaling a Buy. MFI (60) suggests positive money flow. OBV continues to make lower top lower bottom formation. ADX has decreased to 17, suggesting that the current downtrend has lost its entire strength. Directional Indicators have converged but still remains in Sell mode as +DI is still below –DI. Thus majority of Oscillators are suggesting a bullish bias in the near term.

Options data indicates highest Call Open Interest buildup at the strike of 8800 and highest Put build-up is at the strike of 8000. Thus Option data suggests a wide trading range with support coming in at 8000 and resistance around 8800. Friday saw strong open interest being added to the 8300 Put and hence the level of 8300 will act as strong support in the near term.

Trendline Resistance for the Sensex is at 27966.

Trendline Resistance for the Nifty falls at 8508.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8122

8224

8332

8433

8516

8627

8726

Sensex

26897

27196

27544

27828

28087

28384

28693

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy ABB

1397

1436

1421

250

Rs. 6,000

Buy CMC

2027

2083

2053

125

Rs. 3,250

TataElxsi

1233

1290

1296

250

Rs.15,750

AmaraRaj

867

892

905

250

Rs. 9,500

KtkBank

131

143

144

2000

Rs.26,000

Total

Rs.60,500.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Kotak

1399

1370

1444

1490

Buy Strides

1264

1236

1307

1351

Buy SKSMicro

462

453

476

491

Buy Engineers(I)

210

204

220

231

Buy OBC

214

208

224

235

WATCH OUT FOR:

Engineers India

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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