Archives : UNCERTAINITY CONTINUES - 08/09/2017.

UNCERTAINITY CONTINUES - 08/09/2017.

 

CLOSE REQUIRED ABOVE 32091.

 

Nifty continues to falter at the important Reversal level of 9965 but more importantly one needs to watch the Sensex. As per the classical theory, the correction will be completed only when Sensex closes above the Reversal level of 32091 besides Nifty closing above the equivalent level of 9965. Till then, the market will witness strong bouts of Selling and the range trading will continue. The trading range remains between 31900-31100 for the Sensex and 9988-9685 for the Nifty.

 

 


UNCERTAINITY CONTINUES - 08/09/2017.

 

CLOSE REQUIRED ABOVE 32091.

 

Nifty continues to falter at the important Reversal level of 9965 but more importantly one needs to watch the Sensex. As per the classical theory, the correction will be completed only when Sensex closes above the Reversal level of 32091 besides Nifty closing above the equivalent level of 9965. Till then, the market will witness strong bouts of Selling and the range trading will continue. The trading range remains between 31900-31100 for the Sensex and 9988-9685 for the Nifty.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 31932, made a high of 31932, low of 31560 and closed the week at 31687. Thus it closed the week with a loss of 205 points. At the same time the Nifty opened the week at 9984, made a high of 9988, low of 9861 and closed the week at 9934. Thus the Nifty closed the week with a loss of 40 points.

 

On the daily charts, Sensex has formed a small doji whereas Nifty has formed a small black body candle. On the weekly charts, both the indices have formed a small Opening Black body Marubuzo. Both daily as well as weekly patterns are neutral formations. Thus daily as well as weekly candlestick patterns suggest a neutral bias.

 

Since the Nifty has failed to sustain above the critical Reversal level of 9965 and even Sensex has remained below the equivalent Reversal level of 32091, the indices continue to remain in Corrective mode. The Correction will be complete only when the above mentioned levels are overcome on both Sensex and Nifty. In that case, the markets will then progress to test the life-highs again.

 

The indices have taken Support at the critical Trendline which is now at Sensex - 31502 and Nifty - 9819. A breach of this Trendline will push the market lower towards testing of intermediate bottom of Sensex 30680 and Nifty 9448.

 

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 and remained above the short term average of 20dma (Sensex – 31596 and Nifty – 9866) and even the medium term average of 50dma (Sensex – 31777 and Nifty – 9868). Both the indices continue to remain above the long term average of 200dma (Sensex - 29518 and Nifty – 9136). Thus the Trend in the short term and medium term timeframe remains upwards, whereas the trend in the long term timeframe continues to remain bullish.

 

The weekly Bullish Gap between Sensex 29356-29098 and Nifty 9060-8977 forms a strong confluence Support zone as it is very near to the 200dma (Sensex - 29518 and Nifty - 9136) 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 are both in Buy mode. RSI (53) suggests bullish momentum. Stochastic Oscillator %K (75) is below %D and hence in Sell mode. ADX has dropped further to 14, which suggests that it is in sideways trend. Directional Indicators continue in Sell mode. MFI (57) suggests Positive Money Flow. OBV continues in Buy mode. Thus Oscillators are suggesting a mixed bias bias.

 

Options data for September series indicate highest Call Open Interest remains at the strike of 10000 whereas the highest Put build-up is at 9700. Thus Options data suggests a trading range with resistance coming at 10000 & support at 9700.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

9651

9740

9830

9934

10026

10114

10223

Sensex

30692

31017

31360

31687

32062

32396

32686

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Page Ind

18630

18250

19203

19778

Buy PVR

1366

1336

1411

1457

Buy CoLPaL

1159

1138

1191

1224

Buy TataSponge

891

867

928

967

Buy Exide

219

215

225

232

 

WATCH OUT FOR:

 

PVR

 

Tata Sponge

 

 

 

 


 

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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