Archives : NIFTY LIKELY TO TEST THE 200DMA - 29/09/2017.

NIFTY LIKELY TO TEST THE 200DMA - 29/09/2017.

SELL ON EVERY RISE.

The market has not only broken the critical Trendline support but also closed below the medium term average of 50dma. Thus, as a result the trend in the short term as well as intermediate timeframe has turned negative. Nifty has corrected right up to previous higher bottom which is at 9685. In case we break this higher bottom then for the first time since December 2016, the sequence of higher top higher bottom formation will be broken. A Bearish Rising Wedge pattern has been completed for the Nifty and the target is placed at 9237 which is very near to the long term average of 200dma.

 


NIFTY LIKELY TO TEST THE 200DMA - 29/09/2017.

 

SELL ON EVERY RISE.

 

The market has not only broken the critical Trendline support but also closed below the medium term average of 50dma. Thus, as a result the trend in the short term as well as intermediate timeframe has turned negative. Nifty has corrected right up to previous higher bottom which is at 9685. In case we break this higher bottom then for the first time since December 2016, the sequence of higher top higher bottom formation will be broken. A Bearish Rising Wedge pattern has been completed for the Nifty and the target is placed at 9237 which is very near to the long term average of 200dma.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 31986, made a high of 32016, low of 31081 and closed the week at 31283. Thus it closed the week with a loss of 639 points. At the same time the Nifty opened the week at 9960, made a high of 9960, low of 9687 and closed the week at 9788. Thus the Nifty closed the week with a loss of 176 points.

 

On the daily charts, both the indices have formed a small black body candle with an upper shadow. Last two days have formed candlesticks which can be termed as neutral formations. On the weekly charts, both the Sensex and Nifty have formed a big Opening Black body Marubuzo, which indicates bearishness. Thus candlestick study indicates bearishness in the near term.

 

Both the indices have taken support at the higher bottom at Sensex 31128 and Nifty 9685. A break of this support will interrupt the higher top higher bottom formation sequence for the indices for the first time since December 2016. As a result, we will be looking at the Correction of the entire rally of Sensex 7000 points and Nifty 2200 points. The relevant Correction levels are placed at Sensex 30024-29202-28379 and Nifty 9306-9036-8767.

 

This week saw the indices completing a Bearish Rising Broadening pattern. As a result the pattern has a downside target of Sensex 29664 and Nifty 9237. The above targets will be achieved as long as the Sensex remains below 32686 and Nifty 10138.


 

Nifty Rising Broadening

 

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 decisively remained below the short term average of 20dma (Sensex – 31886 and Nifty – 9978) and the medium term average of 50dma (Sensex – 31896 and Nifty – 9946). However, both the indices continue to remain above the long term average of 200dma (Sensex - 29938 and Nifty – 9276). The price formations suggest that the indices are likely to test the 200dma in the near term. Thus the Trend in the short term and the medium term timeframe has turned bearish, whereas the trend in the long term timeframe continues to remain bullish.

 

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 Sell mode. RSI (38) suggests bearish momentum. ADX has improved to 23, which suggests downtrend is gathering strength. Directional Indicators continue in Sell mode. MFI (42) suggests Negative Money Flow. OBV started making lower top lower bottom formation. Bollinger Band has given a fresh Sell signal this week. Thus Oscillators are suggesting a bearish bias.

 

Options data for October series indicate highest Call Open Interest has shifted lower 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

9474

9589

9685

9788

9882

9988

10088

Sensex

30338

30680

30965

31283

31626

31944

32348

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell UltraTech

3854

3944

3719

3581

Sell HDFC

1742

1773

1695

1647

Sell HUL

1174

1198

1128

1091

Sell RiL

781

798

755

728

Sell ApolloTyres

246

253

235

223

 

WATCH OUT FOR:

 

HDFC
 
 

 


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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