Archives : BETWEEN TWO GAPS - 20/01/2016.

BETWEEN TWO GAPS - 20/01/2017.

Please note that the next article update will be on 3rd February 2017. There will be no article update for next week i.e. 27th January 2017.

SENSEX TAKES SUPPORT AT 200DMA.

As expected the markets faced strong hurdle at the Bearish Gap between Sensex 27344-27457 and Nifty 8460-8510 and retraced. After three weeks of upward movement, some consolidation was to be expected and it happened. Both the indices have taken support at the Bullish Gap between Sensex 27022-26914 and Nifty 8322-8293. Interestingly even the long term average of 200dma falls in this Gap, hich makes it a very strong support. The current market movement is in a narrow range defined by the two above mentioned Gaps.


BETWEEN TWO GAPS - 20/01/2017.

Please note that the next article update will be on 3rd February 2017. There will be no article update for next week i.e. 27th January 2017.

SENSEX TAKES SUPPORT AT 200DMA.

As expected the markets faced strong hurdle at the Bearish Gap between Sensex 27344-27457 and Nifty 8460-8510 and retraced. After three weeks of upward movement, some consolidation was to be expected and it happened. Both the indices have taken support at the Bullish Gap between Sensex 27022-26914 and Nifty 8322-8293. Interestingly even the long term average of 200dma falls in this Gap, which makes it a very strong support. The current market movement is in a narrow range defined by the two above mentioned Gaps.

TECHNICALLY SPEAKING.

Sensex opened the week at 27238, made a high of 27422, low of 27009 and closed the week at 27034. Thus it closed the week with a loss of 204 points. At the same time the Nifty opened the week at 8390, made a high of 8460, low of 8340 and closed the week at 8349. Thus the Nifty closed the week with a loss of 51 points.

On the weekly charts, both Sensex and Nifty have formed a Bearish Harami which is a Bearish reversal pattern, but it requires confirmation. On the daily chart, both the indices have formed a Real body Bearish candle. Thus candlestick formations are suggesting a slight bearish bias in the near term.

This week, both the indices faced strong hurdle in the form of a Bearish Gap between Sensex 27344-27457 and Nifty 8460-8510. Despite this, the Pull-back rally continues and the Retracement levels are placed at Sensex 27001-27397-27994 and Nifty 8301-8431-8558.After facing Resistance at the Bearish Gap, both the indices fell and took support at the long term average of 200dma (Sensex – 27022 and Nifty – 8314), which incidentally is coinciding with the Bullish Gap between Sensex 26978-26914 and Nifty 8322-8293. Thus, due to this confluence, there is a strong Support zone formed between Sensex 27022-26914 and Nifty 8322-8293. Thus the market is moving in a narrow trading range which is defined by the Bullish Gap as the upper boundary and Bearish Gap as the lower boundary.

The indices have made an intermediate bottom at Sensex 25700 and Nifty 7900. Only a break below this level will spell trouble for the Bulls as it will complete a strongly bearish pattern. Till the indices remain above this level, one can expect the Pull-back to continue. A Trend Reversal can occur only if Sensex closes above 27794 and Nifty above 8558.

MACD and Price ROC are both positive and continue in Buy mode. RSI (57) still suggests bullish momentum. Stochastic Oscillator %K (81) has gone below %D, indicating a Sell. ADX is at 30 which suggest that the trend is strong. Directional Indicators continue in Buy mode as +DI remains above –DI. MFI (79) suggests Positive Money Flow. OBV has started making higher top, higher bottom formation which is positive. Thus majority of Oscillators are suggesting a bullish bias in the near term.

This week, both the indices took support at just above the long term average of 200dma (Sensex – 27022 and Nifty – 8314) and managed to close just above it. Also both Sensex and Nifty continue to remain above the medium and short term average of 50dma (Sensex – 26524 and Nifty – 8170) and 20dma (Sensex – 26805 and Nifty – 8253). Thus the trend in the short term, medium term and even the long term timeframe continues to remain upwards. 

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

8056

8159

8250

8349

8460

8550

8663

Sensex

25897

26262

26617

27034

27422

27743

28095

 LAST WEEKS RECOMMENDATIONS: 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

TataComm

672

698

698

1400

Rs.26,400

Buy Gail

452

469

471

1500

Rs.28,500

Buy CESC

674

698

704

1100

Rs.22,000

PowerGrid

197

203

204

4000

Rs.28,000

Buy NMDC

143

149

147

6000

Rs.24,000

Total

Rs.1,38,900.

  THIS WEEKS RECOMMENDATIONS: 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy IGL

923

899

960

999

Buy UPL

733

716

759

786

Buy Havells

401

390

418

437

Buy IDBI

74

72

78

82

Buy Elgi Rubber

66

62

73

81

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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