Archives : 200DMA ACTS AS A HURDLE - 06/01/2017.
200 DMA ACTS AS A HURDLE - 06/01/2017.

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RALLY ONLY ABOVE SENSEX 27000.

The New Year started on a positive note as the Pull-back rally progressed, but as expected the critical level of 200dma (Sensex 26922 and Nifty 8279) acted as a strong hurdle. Both the indices tested the Resistance zone of Sensex 26922-27001 and Nifty 8279-8304, but were unsuccessful in closing above it. For any possibility of this Pull-back rally to continue, it is a necessity to surpass the above Resistance zone. Even a break of this zone will not reverse the trend and it will be termed as an extension of the Pull-back rally.

                                                                                            


200 DMA ACTS AS A HURDLE - 06/01/2017.

RALLY ONLY ABOVE SENSEX 27000.

The New Year started on a positive note as the Pull-back rally progressed, but as expected the critical level of 200dma (Sensex 26922 and Nifty 8279) acted as a strong hurdle. Both the indices tested the Resistance zone of Sensex 26922-27001 and Nifty 8279-8304, but were unsuccessful in closing above it. For any possibility of this Pull-back rally to continue, it is a necessity to surpass the above Resistance zone. Even a break of this zone will not reverse the trend and it will be termed as an extension of the Pull-back rally.

TECHNICALLY SPEAKING.

Sensex opened the week at 26711, made a high of 27009, low of 26447 and closed the week at 26759. Thus it closed the week with a gain of 133 points. At the same time the Nifty opened the week at 8210, made a high of 8306, low of 8133 and closed the week at 8243. Thus the Nifty closed the week with a gain of 58 points.

On the weekly charts, both Sensex and Nifty have formed a small white body Spinning Top formation. On the daily chart, Sensex has formed a Dark Cloud Cover whereas Nifty fell short of forming Dark Cloud Cover. Thus daily formations are suggesting a slight bearish bias whereas weekly formation is neutral.

Two weeks back, both the indices took support at the critical level of Sensex 25700 and Nifty 7900 and staged a bounce back. The current rally can be termed as a Pull-back and not a reversal of the prior trend. The Pull-back levels are placed at Sensex 27001-27397-27794 and Nifty 8304-8431-8558.

This week, both the indices tested the Resistance Zone of Sensex 26922-27001 and Nifty 8279-8304 but were unable to close above it. The Resistance zone is due to the confluence of 38.2% Retracement (Sensex – 27001 and Nifty – 8304) and the long term average of 200dma (Sensex – 26922 and Nifty – 8279). Current Pull-back rally will continue only if the above mentioned Resistance zone is crossed.

A break below the Support level of Sensex 25700 and Nifty 7900 will complete Bearish Head and Shoulders pattern and the target as per that falls at a minimum of Sensex - 23794 and Nifty – 7283 and on the higher side at Sensex – 22404 and Nifty – 6867. As per Pattern analysis, both the indices had already formed a Bearish Rising Wedge formation and the extended target as per that formation falls at Sensex 25073 and Nifty 7656.

MACD and Price ROC are both positive and continue in Buy mode. RSI (56) suggests bullish momentum. Stochastic Oscillator %K (91) is above %D, indicating a continuation in Buy mode. ADX is at 27 which suggest that downward trend is not over yet. Directional Indicators have given a Buy as +DI has gone above –DI. MFI (69) suggests Positive Money Flow. OBV continues in sideways mode. Thus Oscillators are suggesting a bullish bias in the near term.

This week, both the indices tested the long term average of 200dma (Sensex – 26922 and Nifty – 8279) and medium term average of 50dma (Sensex – 26613 and Nifty – 8202). Both the indices managed a close above 50dma but failed to close above the 200dma. However, both the indices are still above the short term average of 20dma (Sensex – 26425 and Nifty – 8121). Thus the trend in the short term remains upwards, whereas the trend in the medium term has turned bullish whereas the trend in the long term timeframe remains down.

Options data for January series indicate highest Call Open Interest build-up at the strike of 8400 and highest Put build-up remains at 8000. Thus Options data suggests a trading range with resistance coming in at 8400 and support at 8000.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7978

8063

8157

8243

8353

8460

8550

Sensex

25717

26080

26405

26759

27105

27457

27845

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Maruti

5319

5499

5657

150

Rs.50,700

Buy IGL

918

948

960

1100

Rs.46,200

Buy GaiL

439

454

451

1500

Rs.18,000

TechM

488

505

507

1100

Rs.20,900

OiLInd

452

467

480

1700

Rs.47,600

Total

Rs.1,83,400.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy BemL

993

961

1026

1061

Buy Siemens

1164

1139

1202

1241

Buy MoiL

401

391

416

432

Buy AtlasCycle

450

437

471

493

Buy RCF

54

52

58

63

WATCH OUT FOR:

BEML

Yes Bank

RCF

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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