Archives : BULLISH SEPERATING LINES - 29/08/2008
BULLISH SEPERATING LINES – 29/08/2008.  

The title of last week’s article ‘Up & Down, Down & Up’ was very appropriate as the market went up one day and came down the next day only to go up the day after. The confusion prevailing was too much as most of the short term positional traders lost heavily as the stop losses got triggered on both the long as well as the short side. The market movement became difficult as the choppiness only increased as the week progressed further. Finally the market went up on Friday based on good Inflation & GDP numbers; also the overnight U.S. market rally helped the sentiment in our market and as a result the market closed higher by 500 points.

Last two days in the Sensex saw the formation of a continuation pattern which is known as Bullish Seperating Lines. On the weekly charts the Sensex formed a Bullish Reversal Pattern known as the DragonFly and the Nifty formed a Bullish Hammer which is also a strong Reversal Pattern.

  
  • WHAT IS BULLISH SEPERATING LINES?
  • INFLATION & GDP.
  • SENSEX.
  • NIFTY.
  • LAST  WEEK’S RECOMMENDATIONS:
  • THIS WEEK’S RECOMMENDATIONS:
  • WATCH OUT FOR EDUCOMP:

 
BULLISH SEPERATING LINES – 29/08/2008.  

The title of last week’s article ‘Up & Down, Down & Up’ was very appropriate as the market went up one day and came down the next day only to go up the day after. The confusion prevailing was too much as most of the short term positional traders lost heavily as the stop losses got triggered on both the long as well as the short side. The market movement became difficult as the choppiness only increased as the week progressed further. Finally the market went up on Friday based on good Inflation & GDP numbers; also the overnight U.S. market rally helped the sentiment in our market and as a result the market closed higher by 500 points.

Last two days in the Sensex saw the formation of a continuation pattern which is known as Bullish Seperating Lines. On the weekly charts the Sensex formed a Bullish Reversal Pattern known as the DragonFly and the Nifty formed a Bullish Hammer which is also a strong Reversal Pattern.

 

  WHAT IS BULLISH SEPERATING LINES?

Bullish Seperating Lines is a Continuation Candlestick pattern in which the first day is a long black body (preferably a Marubuzo) followed by a long white body (preferably again a Marubuzo) on the next day such that the opening on both the days is the same. It is also called as Dividing Lines.

In our markets, the Sensex had formed a Black candle and then a White Marubuzo on Friday, where the opening on both the days was the same. The sentiment on Thursday was such that the traders lost confidence in their long positions as the market moved down continuously. But on Friday the market opened with a huge gap up such that the opening was the same as that on Thursday and continued the upward journey without coming down at all and thus changing the sentiment back to positive.

INFLATION & GDP.  

Inflation dipped after a long time and came in at 12.40% v/s 12.63% last week. The fall in Naptha prices (due to the fall in crude prices) by 9% was the primary reason for the inflation to come down. Even though the dip in inflation is a welcome relief, the RBI will not ease the interest rate scenario in the near term. Let us hope dip in inflation is not a one off event.

GDP growth numbers came in at 7.9% v/s 8.8% last quarter, almost on expected lines. This was the first time in last nine quarters that the GDP numbers dipped below 8%. The market welcomed both the numbers as it rallied by 500 points on Friday.

SENSEX.

Sensex opened the week at 14643, made a high of 14672, low of 14002 and closed the week at 14564. The weekly gain for the Sensex was 163 points. The Sensex has formed a Bullish continuation pattern known as Bullish Seperating Lines on the daily chart. On the weekly charts, it has formed a Dragon fly. ROC is negative but has changed its direction and now is pointing upwards. The RSI is too pointing northwards.

The support taken by the Sensex was the trendline support at 14002 and now the same support is at 13824. The trendline support is at 14464-14031-13824. The Trendline resistance is at 15322-15508.

For the week ahead, the Resistance is at 14672-14824-15132-15270. Support is at 14464-14279-14002-13824.

NIFTY.

Nifty opened the week at 4317, made a high of 4398, low of 4201 and closed the week at.4360. Thus the weekly gain was 33 points. Nifty formed a Bullish Hammer on the weekly chart which is a Reversal pattern.

The Open Interest PCR is at 1.36 which is healthy and shows presence of hedged positions in the market. The increased Put writing at 4200 strike shows that the market is not likely to break that support.

For the week ahead, the Resistance is at 4398-4447-4587-4639. Support is at 4264-4230-4193.  

LAST  WEEK’S RECOMMENDATIONS:

Though the market was extremely choppy but still majority of our recommendations were almost able to achieve their targets.

BUY SAIL 150 TGT 156 Reached 158.

BUY CORE PROJECTS 285TGT 305 Reached 311.

BUY CORROMONDEL FERT 184 TGT 195 Reached 193.

BUY PHOENIX MILLS 184 TGT 197 Reached 197.

BUY GTL INFRA 41 TGT 44 Reached 43

BUY TORRENT POWER 115 TGT 123 Reached 118.

BUY STERLITE IND 627 TGT 651 Reached 648.

THIS WEEK’S RECOMMENDATIONS:

  • BUY EDUCOMP 3770 SL 3690 TGT 3859-3941-4128.
  • BUY GREAT OFFSHORE 530 SL 507 TGT 556-575.
  • BUY KLG SYSTEL 397 SL 385 TGT 414-428.
  • BUY MPHASIS BFL 242 SL 236 TGT 251-259.
  • BUY GTC IND 138 SL 133 TGT 149-156-165.
  • BUY ABAN 2083 SL 2042 TGT 2158-2225-2263.
  • BUY HCL TECH 233 SL 229 TGT 240-249-256.
 

WATCH OUT FOR EDUCOMP:

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