Archives : MARKET COOLS DOWN - 13/04/2017.

MARKET COOLS DOWN - 13/04/2017.

 

SHORT TERM TREND TURNS DOWN.

 

The indices have witnessed a breathtaking rally in the past three months. Market participants who have not been able to buy are feeling ‘left-out’ and are awaiting a Correction so that they can enter. But the market was in no mood to oblige and has continued its upward journey without any meaningful Correction. On Friday, for the first time in 2017, the short term trend has turned down and thus one can expect some downside. The fall will be restricted as strong support will be seen in the form of Bullish Weekly Gap between 9060-8977 for the Nifty.

 



MARKET COOLS DOWN - 13/04/2017.

 

SHORT TERM TREND TURNS DOWN.

 

The indices have witnessed a breathtaking rally in the past three months. Market participants who have not been able to buy are feeling ‘left-out’ and are awaiting a Correction so that they can enter. But the market was in no mood to oblige and has continued its upward journey without any meaningful Correction. On Friday, for the first time in 2017, the short term trend has turned down and thus one can expect some downside. The fall will be restricted as strong support will be seen in the form of Bullish Weekly Gap between 9060-8977 for the Nifty.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 29752, made a high of 29838, low of 29442 and closed the week at 29461. Thus it closed the week with a loss of 245 points. At the same time the Nifty opened the week at 9225, made a high of 9246, low of 9144 and closed the week at 9150. Thus the Nifty closed the week with a loss of 48 points.

 

On the daily charts, both the indices have formed a real black body candle for second consecutive day. On the weekly charts, both Sensex and Nifty have formed a real black body candle after a neutral formation in last week. Thus both daily and weekly formations are suggesting a bearish bias in the near term.

 

The current downward move in the indices can be called as consolidation with a bearish bias and hence any further downward pressure will take the indices towards strong support of the weekly gap i.e. between Sensex 29356-29098 and Nifty 9060-8977. This gap will not only act as strong support, but is also a Measuring Gap. The target as per Gap theory falls at Sensex 32737 and Nifty 10144.

 

It has been over a month, since the indices closed above Sensex 29077 and Nifty 8968. As a result, both the indices completed a Saucer formation on the daily charts. The target as per this pattern falls at Sensex 31153-32437 and Nifty 9630-10043. On the weekly formation, both the indices completed a Cup and Handle formation and the targets are Sensex 34677-37554 and Nifty 10536-11413.

 

If one considers the Cup and Handle formation of 7 years from 2007 to 2014, the target for that pattern falls at Sensex 34715 and Nifty 10462. The Golden Ratio target of the current pattern weekly pattern of 2 years is at Sensex 34677 and Nifty 10536. Thus in the medium term one can expect a test of the above targets i.e. Sensex 34677-34715 and Nifty 10462-10536.

 

MACD despite being in positive zone continues with its Sell signal. Price ROC continues to remain positive and in Buy mode. RSI (54) still suggests Bullish momentum. Stochastic Oscillator %K (69) continues in Sell mode. ADX is at 35 which suggest that the Uptrend is strong. Directional Indicators continue in Buy mode as +DI remains above –DI. MFI (59) suggests Positive Money Flow. OBV continues in Buy mode. Buy signal in Bollinger Band got negated on Friday, when price closed below the mean. Besides, Oscillators like MACD, RSI and OBV are showing negative divergence of the first order. Thus Oscillators are painting a mixed picture with slight negative bias.

 

This week, both the indices have closed below the short term average of 20dma (Sensex – 29579 and Nifty – 9158) for the first time in this calendar year. Both the indices continue to remain above the medium term average of 50dma (Sensex – 29005 and Nifty – 8975) and even the long term average of 200dma (Sensex – 27834 and Nifty – 8588). Thus the trend in the short term has turned down whereas the trend in the medium term and the long term timeframe continues to remain bullish.

 

Options data for April series indicate highest Call Open Interest build-up has shifted lower at the strike of 9300 and highest Put build-up remains at 9000. Thus Options data suggests a trading range with resistance coming in at 9300 and support at 9000.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8860

8975

9060

9150

9246

9339

9444

Sensex

28417

28721

29098

29461

29824

30252

30662

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy BOSCH

23272

22780

24000

24779

Buy SRF

1693

1652

1755

1821

Buy CEAT

1451

1418

1501

1555

Buy Capital First

785

766

814

845

Buy PNB

156

152

162

169

 

 

WATCH OUT FOR:

 

 

PNB

 

 

Vimta Labs

 

 

 

 

 

 

 

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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