Archives : BEARISHNESS TO INTENSIFY BELOW 9700 - 18/08/2017.

__BEARISHNESS TO INTENSIFY BELOW 9700 - ____18/08/2017.__

__SELLING PRESSURE AT HIGHER LEVEL.__

As the Correction continues, markets are witnessing Selling at every higher levels and this will continue till the market conquers the **Resistance zone of Nifty 9958-9965**. A closing above this level will indicate end of Correction and resumption of prior Uptrend. On the other hand, a **break of critical Support Trendline (Nifty-9712) will signal further intensification of Correction** which will have Corrective levels placed at 9280-9015-8751.

__BEARISHNESS TO INTENSIFY BELOW 9700 - ____18/08/2017.__

__SELLING PRESSURE AT HIGHER LEVEL.__

As the Correction continues, markets are witnessing Selling at every higher levels and this will continue till the market conquers the **Resistance zone of Nifty 9958-9965**. A closing above this level will indicate end of Correction and resumption of prior Uptrend. On the other hand, a **break of critical Support Trendline (Nifty-9712) will signal further intensification of Correction** which will have Corrective levels placed at 9280-9015-8751.

__TECHNICALLY SPEAKING.__

Sensex opened the week at **31299, **made a high of **31937,** low of **31298 **and closed the week at **31524**. Thus it closed the week with a gain of **311** points. At the same time the Nifty opened the week at **9755**, made a high of **9947**, low of **9752** and closed the week at **9837**. Thus the Nifty closed the week with a gain of **127** points.

On the daily charts, both Sensex and Nifty have formed an **Opening Black body Marubuzo** but it has a smaller body and a longer shadow which indicates a reduced bearishness. On the weekly charts, both the indices have formed a small white body candle which is on lines of Bullish Harami but it cannot be classified as it has formed near the top as per weekly chart. Thus **daily as well as weekly candlestick patterns suggest bearishness in the near term**.

Last week, the indices bounced back after taking **Support at the critical Trendline which is at Sensex - 31269 and Nifty - 9712**. A breach of this Trendline will push the market lower towards **testing of intermediate bottom of Sensex 30680 and Nifty 9448**. A further intensification in Correction will see the indices testing the Correction levels of entire rally of Sensex 7000 points and Nifty 2200 points. The relevant **Correction levels are placed at Sensex 30024-29202-28379 and Nifty 9280-9015-8751**.

The Correction will be deemed complete only when the indices close above their respective **Resistance zone of Sensex 32053-32091 and Nifty 9958-9965** which is due to the confluence of **20dma and 61.8% Corrective level of the current fall**. A closing above this Resistance zone will signal the end of Correction and a resumption of prior Uptrend.

The current Rally has produced **two major Bullish Gaps**. The first **Bullish gap** is on daily charts, between **Sensex 29780-29681** and **Nifty 9250-9225** will act as strong Support. The **second Bullish Gap** which is more critical as it is also a **Weekly Gap i.e. between Sensex 29356-29098** and** Nifty 9060-8977** hold the key to the long term trend.

This week, both the indices tested the **short term average of 20dma (Sensex – 32053 and Nifty – 9958)** and fell from there whereas the **medium term average of 50dma (Sensex – 31646 and Nifty – 9790)** provided good Support as the market recovered from that level. Thus a break of the medium term average will be an indication that the Correction will intensify and lower levels will be visited. But both the indices continue to remain above the **long term average of 200dma (Sensex - 29193 and Nifty – 9028)**. Thus the **Trend in the short term remains bearish, whereas the trend in the medium term and long term timeframe continues to remain upwards.**

The **weekly Bullish Gap between Sensex 29356-29098 and Nifty 9060-8977 **forms a **strong confluence Support zone** as it encompasses the **200dma (Sensex - 29193 and Nifty - 9028) as well as the 50% Retracement level (Sensex - 29202 and Nifty - 9015)**. Thus **if the Correction deepens then the indices will be finding this Gap Support as very strong** and difficult to breach. Interestingly, this is the level where the current Cup and Handle formation was completed and a **retest of the neckline will be good for the overall health of the market**.

On the weekly formation, both the indices had 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 are negative and continue in Sell mode. RSI (46) suggests bearish momentum. Stochastic Oscillator %K (42) is above %D and hence in Buy mode. ADX has dropped further to 26, which suggests that the trend is still intact, but losing strength. Directional Indicators continue in Sell mode as +DI remains below –DI. MFI (46) suggests Negative Money Flow. OBV is in Sell mode as it is making lower top, lower bottom formation. Bollinger Band continues with its Sell signal given in previous week. Thus **Oscillators are suggesting a bearish bias.**

Options data for August series indicate highest Call Open Interest remains at the strike of 10000 whereas the highest Put build-up has shifted higher at 9800. Thus **Options data suggests a narrow trading range with resistance coming at 10000 & support at 9800**.

__INDEX LEVELS:__

__ __ | __S3__ | __S2__ | __S1 __ | __CLOSE__ | __R1__ | __R2__ | __R3__ |

**Nifty** | **9532** | **9637** | **9723** | **9837** | **9944** | **10023** | **10114** |

**Sensex** | **30444** | **30798** | **31193** | **31524** | **31911** | **32289** | **32672** |

__THIS WEEKS RECOMMENDATIONS:__

__STOCK__ | __CMP__ | __SL__ | __Tgt-1__ | __Tgt-2__ |

**Sell OFSS** | **3432** | **3501** | **3327** | **3219** |

**Sell Balkrishna** | **1489** | **1527** | **1432** | **1373** |

**Sell L&T** | **1130** | **1157** | **1089** | **1047** |

**Sell M&M** | **1370** | **1400** | **1325** | **1278** |

**Sell Manappuram** | **85** | **87** | **81** | **77** |