Archives : STRONG SUPPORT AT 8479-8475 - 26/06/2016.

CONSOLIDATION WITH A BEARISH BIAS - 26/08/2016.

8479-8475 – STRONG SUPPORT.

Market continues to move in a tight band of just 250 Nifty points i.e. between 8728-8476. Even though this status remains unaltered, the bias has turned bearish with the formation of bearish candlestick pattern. As a result, one can expect the market to test the lower boundary of the trading range which is in the form of a strong Bullish Gap between 8479-8475. A breach of this Support zone will signal a Correction phase for the market.


CONSOLIDATION WITH A BEARISH BIAS - 26/08/2016.

8479-8475 – STRONG SUPPORT.

Market continues to move in a tight band of just 250 Nifty points i.e. between 8728-8476. Even though this status remains unaltered, the bias has turned bearish with the formation of bearish candlestick pattern. As a result, one can expect the market to test the lower boundary of the trading range which is in the form of a strong Bullish Gap between 8479-8475. A breach of this Support zone will signal a Correction phase for the market.

TECHNICALLY SPEAKING.

Sensex opened the week at 28088, made a high of 28154, low of 27696 and closed the week at 27782. Thus it closed the week with a loss of 295 points. At the same time the Nifty opened the week at 8667, made a high of 8684, low of 8547 and closed the week at 8572. Thus the Nifty closed the week with a loss of 94 points.

On the daily charts, both Sensex and Nifty have formed a small black body candle. On the weekly charts, both the indices have formed a bearish black body candle which acts as a confirmation to Bearish Tri-Star pattern which was completed previous week. Thus daily and weekly candlestick study suggests a bearish bias.

Since past two months, both the indices continue to trade in a very narrow range between Sensex 28289-27627 and Nifty 8728 – 8476. As per the weekly candlestick pattern, the bias has turned negative and hence the lower end of the trading range is likely to be tested. On the lower side, the trading range is supported by the Bullish Gap between Sensex 27667-27647 and Nifty 8479-8475. This Gap acted as a strong support for four times and hence it becomes a very critical Support in the near term.

Interestingly, the above Bullish Gap i.e. between Sensex 27667-27647 and Nifty 8479-8475 will be the first strong Support. A break of this Gap, will lead to testing of the more powerful Bullish Weekly Gap between Sensex 27358-27294 and Nifty 8407-8398. This Weekly Bullish Gap is also a Measuring Gap and the target for which falls at Sensex – 28741 and Nifty – 8833.

As the Sensex and Nifty continue to remain above their critical 61.8% Retracement level (Sensex – 27148 and Nifty 8243) of the entire fall from Sensex 30024 to 22494 and Nifty 9119 to 6825. This marks the end of Correction phase and is now signalling a move towards testing life highs of Sensex 30024 and Nifty 9119.

Both the indices completed a Bullish Flag pattern and the target for the pattern falls at Sensex – 28859 and Nifty – 8869. Both the targets will be achieved as long as Sensex remains above 27034 and Nifty above 8287.

MACD continues in Sell mode despite being in positive zone. Price ROC has just turned negative and has signalled a Sell. RSI (48) suggests bearish momentum. Stochastic Oscillator %K (36) is below %D and hence continues in Sell mode. ADX has dropped to 18 which suggest that Uptrend has lost all its strength. Directional Indicators have given a fresh Sell as +DI has gone below –DI. MFI (35) suggests Negative Money Flow. Thus Oscillators are projecting a bearish bias in the near term.

This week, both the indices tested and closed below the short term average of 20dma (Sensex – 27975 and Nifty – 8629). Both the indices continue to remain well above the medium term average of 50dma (Sensex – 27587 and Nifty – 8482) and even the long term average of 200dma (Sensex – 25828 and Nifty – 7889). Thus the trend in the short term time frame has turned down whereas the trend in the medium term and the long term timeframe continues to remain Bullish.

Options data for September series indicate highest Call Open Interest build-up at the strike of 9000 and highest Put build-up at 8500. Thus Options data suggests a trading range with resistance coming in at 9000 and support at 8500.

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

TataComm

504

519

529

1400

Rs.35,000

CairnInd

211

220

211

3500

Rs. -

AllahbdBnk

79

83

82

10000

Rs.30,000

TataPwr

78

82

79

9000

Rs. 9,000

Buy SaiL

49

53

51

12000

Rs.24,000

Total

Rs.98,000.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8287

8398

8489

8572

8669

8788

8891

Sensex

26776

27034

27385

27782

28284

28693

29094

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Tata Chem

565

549

589

615

Buy OiLIndia

384

376

397

411

Buy IndBulHsg

818

799

847

877

Buy RCom

53

51

57

61

Buy Uniply

210

204

220

231

WATCH OUT FOR:

OiL

RCOM

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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