Archives : BEARISH ENGULFING ON WEEKLY CHARTS - 30/10/2015.

BEARISH ENGULFING ON WEEKLY CHARTS - 30/10/2015.

PULL-BACK COMPLETED.

The indices tested the Resistance zone between 8322-8380 this week, but could not overcome that. The Resistance zone was due to confluence of not only a critical Retracement, Bearish Gap but also the 200dma. A Bearish Engulfing pattern at the Resistance zone resulted in failure to overcome this zone, thereby indicating that the current Pull-back rally of last seven weeks is over and the market is now back to searching and testing lower levels as the long term trend of the market remains bearish.


BEARISH ENGULFING ON WEEKLY CHARTS - 30/10/2015.

PULL-BACK COMPLETED.

The indices tested the Resistance zone between 8322-8380 this week, but could not overcome that. The Resistance zone was due to confluence of not only a critical Retracement, Bearish Gap but also the 200dma. A Bearish Engulfing pattern at the Resistance zone resulted in failure to overcome this zone, thereby indicating that the current Pull-back rally of last seven weeks is over and the market is now back to searching and testing lower levels as the long term trend of the market remains bearish.

TECHNICALLY SPEAKING.

Sensex opened the week at 26575, made a high of 27618, low of 26585 and closed the week at 26656. Thus it closed the week with a loss of 814 points. At the same time the Nifty opened the week at 8333, made a high of 8336, low of 8044 and closed the week at 8065. Thus the Nifty closed the week with a loss of 230 points.

On the weekly charts both the indices have formed a Bearish Engulfing pattern at the Resistance zone. It is a strong reversal as this weeks Black body candle not only engulfs the previous weeks candle body but also its shadows. Thus it will be negated only if Nifty closes above 8336 on weekly basis. On the daily chart, both the indices have formed a bearish candle on all the five days of the week. Thus the daily as well as weekly candlestick pattern studies suggest bearishness in the near term.

The Resistance zone between Sensex 27442-27564 and Nifty 8322-8359 (which is a confluence of 50% Retracement, Bearish Gap as well as the critical 200dma) proved to be too powerful for the Bulls as the indices retraced from this zone and as a result the current pull-back now stands completed. The long term Trend will turn positive for the market only if the indices overcome this Resistance zone.

This week both the indices have left behind Bearish Gaps between Sensex 27163-27209 and Nifty 8209-8217 which will act as strong Resistance in the immediate short term.

Despite the current pull-back, both the indices remain on track to achieve the targets for Head and Shoulders pattern (Sensex 24486 and Nifty 7425). Besides a higher degree Head and Shoulders got completed recently, the target for that falls at Sensex 22552 and Nifty 6741.

MACD and Price ROC have both turned bearish this week and are in Sell mode. RSI (45) too went below the equilibrium line suggesting bearish momentum. Stochastic Oscillator %K is below %D and as a result continues in Sell mode. ADX has dropped further to 17, suggesting the current trend of the market is not strong. However the Directional Indicators gave a bearish crossover this week, generating a Sell signal. MFI (27) continues to suggest negative money flow. OBV has started making lower top lower bottom formation. The Buy signal in Bollinger Band stands negated this week as the indices have closed below the mean of Bollinger Band. Thus Oscillators are showing a bearish bias in the near term.

This week, both the indices went very close to the 200dma (Sensex – 27663 and Nifty – 8377) but could not overcome that. However both Sensex and Nifty closed below the short term average of 20dma (Sensex – 27011 and Nifty – 8172) and are now just hanging above the medium term average of 50dma (Sensex – 26429 and Nifty – 8015). Thus the trend in the short term has turned bearish whereas the trend in the medium term timeframe still remains up and that in the long term timeframe continues to remain bearish.

Options data for November series indicates highest Put Open Interest build-up at the strike of 8000 and highest Call build-up at the strike of 8500. Thus Option data suggests a trading range with resistance coming in at 8500 and support at 8000.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7723

7846

7955

8065

8163

8252

8359

Sensex

25395

25820

26215

26656

27000

27318

27618

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

HDFCBk

1108

1143

1124

250

Rs. 4,000

Buy HDFC

1337

1383

1350

250

Rs. 3,250

Buy CESC

605

628

612

500

Rs. 3,500

AuroPh

827

862

862

500

Rs.17,500

AtlasCyc

239

251

250

1000

Rs.11,000

Total

Rs.39,250.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell ABNuvo

2064

2118

1982

1897

Sell TechMah

539

554

516

492

Sell IBuLHsgFin

720

737

692

663

Sell Hexaware

240

247

228

215

Sell Crompton

174

179

166

157

WATCH OUT FOR:

Tech Mahindra

TCS

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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