Archives : CONSOLIDATION CONTINUES WITH A BEARISH BIAS - 16/12/2016.
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CONSOLIDATION CONTINUES WITH A BEARISH BIAS - 16/12/2016.

 

200 DMA - STRONG HURDLE.

 

The market had already discounted a 25bps interest rate hike by the US Fed and hence the market did not show any major directional movement post the news. The indices thus continues to move in sideways consolidation mode with short term average of 20dma acting as a support and long term average of 200dma acting as a strong hurdle. The market is in midst of a Pull-back and the Pull-back will continue only if the indices manage to overcome the strong hurdle of 200dma.

 

CONSOLIDATION CONTINUES WITH A BEARISH BIAS - 16/12/2016.

200 DMA - STRONG HURDLE.

The market had already discounted a 25bps interest rate hike by the US Fed and hence the market did not show any major directional movement post the news. The indices thus continues to move in sideways consolidation mode with short term average of 20dma acting as a support and long term average of 200dma acting as a strong hurdle. The market is in midst of a Pull-back and the Pull-back will continue only if the indices manage to overcome the strong hurdle of 200dma.

TECHNICALLY SPEAKING.

Sensex opened the week at 26725, made a high of 26737, low of 26407 and closed the week at 26489. Thus it closed the week with a loss of 258 points. At the same time the Nifty opened the week at 8230, made a high of 8230, low of 8121 and closed the week at 8139. Thus the Nifty closed the week with a loss of 122 points.

On the daily and weekly charts, both Sensex and Nifty have formed small black body candles. Interestingly, Nifty has formed an Opening Black body Marubuzo on the daily as well as weekly charts, but it cannot be perceived as bearish as the size of the candle is small and also it has formed in sideways consolidation. Thus daily and weekly candlestick patterns indicate consolidation with a minor bearish bias.

For the past two weeks, both the indices have been trading in a narrow band which is defined by the 20dma (Sensex – 26369 and Nifty – 8128) on the lower side acting as support and the 200dma (Sensex – 26755 and Nifty – 8221) on the upper side acting as resistance. A break of this narrow band will lead the indices towards testing the trading range between Sensex 26803 -25717 and Nifty 8275 – 7916.

As per Pattern analysis, both the indices had formed a Bearish Rising Wedge formation and the extended target as per that formation falls at Sensex 25073 and Nifty 7656.

The current fall is a Retracement of the entire rise from Sensex 22494 to 29077 and Nifty from 6825 to 8968. Thus, the relevant Correction levels are placed at Sensex 26562-25786-25009 and Nifty 8150-7897-7644.

MACD is negative but continues in Buy mode. Price ROC has just turned negative, suggesting bearish momentum. RSI (44) suggests continuation of bearish momentum. Stochastic Oscillator %K (52) is below %D, indicating a continuation in Sell mode. Sell signal on Bollinger band has been negated. ADX is at 36 which suggest that downward trend is still strong. Directional Indicators continue in Sell mode as +DI remains below –DI. MFI (59) suggests Positive Money Flow. OBV continues in Sell mode, making lower Top, lower Bottom formation. Thus majority of Oscillators are suggesting a bearish bias in the near term.

This week, both the indices tested both the short term average of 20dma (Sensex – 26369 and Nifty – 8128) and the long term average of 200dma (Sensex – 26755 and Nifty – 8221). Interestingly both the indices managed to close above the 20dma but failed to close above the 200dma. However, both the indices continued to remain below the medium term average of 50dma (Sensex – 27091 and Nifty – 8369). Thus the trend in the short term has turned up whereas the trend in the long term timeframe and the medium term timeframe remains down.

Options data for December series indicate highest Call Open Interest build-up at the strike of 8300 and highest Put build-up remains at 8000. Thus Options data suggests a wide trading range with resistance coming in at 8300 and support at 8000.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7809

7927

8055

8139

8251

8353

8460

Sensex

25340

25717

26100

26489

26872

27294

27647

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell Dr Reddy

3108

3185

2992

2875

Sell JsW SteeL

1618

1655

1562

1503

Sell Grasim

818

838

788

756

Sell Castrol

371

381

356

340

Sell Dabur

271

276

263

254

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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