Archives : SHORT TERM BIAS TURNS NEGATIVE - 23/06/2017.

SHORT TERM BIAS TURNS NEGATIVE - 23/06/2017.

 

BEARISH BIAS DRAGS THE MARKET.

 

The consolidation, which is on for the past three weeks, continues but the bias has turned negative. Interestingly, after supporting the market for the entire of last week, the short term moving average of 20dma was finally breached on Friday. As a result the short term trend has turned bearish. A break of Sensex 31017 and Nifty 9560, will take the indices lower to test the medium term average of 50dma (Sensex – 30514 and Nifty – 9452).

 



SHORT TERM BIAS TURNS NEGATIVE - 23/06/2017.

 

BEARISH BIAS DRAGS THE MARKET.

 

The consolidation, which is on for the past three weeks, continues but the bias has turned negative. Interestingly, after supporting the market for the entire of last week, the short term moving average of 20dma was finally breached on Friday. As a result the short term trend has turned bearish. A break of Sensex 31017 and Nifty 9560, will take the indices lower to test the medium term average of 50dma (Sensex – 30514 and Nifty – 9452).

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 31168, made a high of 31522, low of 31110 and closed the week at 31138. Thus it closed the week with a gain of 82 points. At the same time the Nifty opened the week at 9626, made a high of 9698, low of 9565 and closed the week at 9574. Thus the Nifty closed the week with a loss of 14 points.

 

On the daily charts, both Sensex and Nifty have formed a real black body candle. On the weekly charts, Nifty has formed a small black body candle, but Sensex has formed almost like a Shooting Star but it cannot be classified as one, because there is no gap between the bodies. Thus candlestick study indicates bearish bias in the near term.

 

Just like last week, this week too, the indices took support at the short term average of 20dma (Sensex – 31194 and Nifty – 9628). But alas on Friday, the bearish momentum helped the market in closing below the 20dma. As a result, not only turned the short term trend has turned down, but it has also opened the path towards testing of the medium term average of 50dma (Sensex – 30514 and Nifty – 9452). Both the indices continue to remain above the long term average of 200dma (Sensex – 28521 and Nifty – 8815). Thus the Trend in the short term has turned bearish, whereas the Trend in the medium term and the long term timeframe continues to be Bullish.

 

Both the indices had left behind a bullish gap between Sensex 29780-29681 and Nifty 9250-9225. This gap was tested and it successfully acted as Support. Thus a break of this Support will turn the medium term trend to bearish.

 

In the previous fall, the market went down to test the strong support in the form of the weekly gap i.e. between Sensex 29356-29098 and Nifty 9060-8977. This gap provided support and the indices recovered from that level. This Gap is now very significant as a break of this Gap will turn the intermediate trend to bearish. Besides acting as a support, this gap also acts as a Measuring Gap. The target as per Gap theory falls at Sensex 32737 and Nifty 10144.

 

Both the indices have already achieved the golden ratio target (Sensex – 31153 and Nifty 9630) of Saucer formation. The Saucer pattern was completed when the indices closed above Sensex 29077 and Nifty 8968. The complete pattern target which is at Sensex 32437 and Nifty 10043 remains to be achieved. 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 and Price ROC, both continue in Sell mode. RSI (51) suggests momentum is still slightly bullish. Stochastic Oscillator %K (35) is below %D and hence continues in Sell mode. ADX is at 27 which suggest that the Uptrend is undergoing further consolidation. Directional Indicators continue in Buy mode as +DI remains above –DI. MFI (36) suggests Negative Money Flow. OBV continues its sideways movement. Buy signal in Bollinger Band has been negated. Thus Oscillators are suggesting a bearish bias.

 

Options data for June series indicate highest Call Open Interest is at the strike of 9700 and highest Put build-up is at 9500. Thus Options data suggests a trading range with resistance coming in at 9700 and support at 9500.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

9273

9390

9491

9574

9676

9762

9844

Sensex

30007

30366

30712

31138

31522

31889

32223

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Grasim

1171

1145

1200

1241

Buy ABNuvo

1742

1706

1796

1851

Buy ReLInfra

503

491

521

540

Buy Pidilite

830

813

856

883

Buy VimtaLabs

136

132

143

151

 

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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