Archives : 12472-12284 FALLING GAP BARRIER - 08/05/2009.

12472-12284 FALLING GAP BARRIER – 08/05/2009.

Last week we had clearly written in our analysis that “Sensex on breakout above 11552 will have an immediate target of 12019 and Nifty above 3499 will head towards 3683-3726”. How accurate it was can be seen by the way both the indices move towards their respective targets and were halted at those levels in the short term.The market had run up so fast that it was becoming breathless. The current scenario can be linked to a short term consolidation phase with a negative bias, so that the market can regain its strength.  

  • 12472-12284 STRONG BARRIER FOR THE MARKET.
  • SENSEX.
  • NIFTY.
  • INDEX LEVELS:
  • LAST WEEK’S RECOMMENDATIONS:
  • THIS WEEK’S RECOMMENDATIONS:
  • WATCH OUT FOR:
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12472-12284 FALLING GAP BARRIER – 08/05/2009.

Last week we had clearly written in our analysis that “Sensex on breakout above 11552 will have an immediate target of 12019 and Nifty above 3499 will head towards 3683-3726”. How accurate it was can be seen by the way both the indices move towards their respective targets and were halted at those levels in the short term.The market had run up so fast that it was becoming breathless. The current scenario can be linked to a short term consolidation phase with a negative bias, so that the market can regain its strength.

12472-12284 STRONG BARRIER FOR THE MARKET.

Sensex is currently encountering a strong resistance in the form of a falling gap (12472-12284) which had been created on 6th October 2008, when the market was crashing. This gap had never been tested after it got created and this is the first real attempt to fill that gap. Hence, as a result the Sensex will have to gather enough momentum and strength before it can fill and overcome this gap, which will continue to be a strong barrier ahead. 

SENSEX. 

Sensex opened the week at 11635, made a high of 12272, made a low of 11635, and closed on Thursday at 11876, thus registering a weekly gain of 473 points. 

Sensex has formed a Black Candle on the daily charts on Friday. On the weekly charts it has formed a formation closely resembling a ‘Shooting Star’. But, we cannot call this exactly a Shooting Star because the body of the candle is slightly bigger then what it should be. The long upper shadow indicates strong selling pressure at higher levels. The absence of lower shadow shows that the Sensex started the week strong and went from strength to strength, but was not able to sustain at higher levels because of the selling pressure. 

The indicators like RSI & ROC are showing negative divergences. 

Sensex opened with a gap on Monday and that gap remained. On the daily charts the Sensex has left a rising gap between 11430-11635. It can be compared to an Exhaustion Gap which occurs at the end of a rally. Even on the weekly charts the Sensex has a left a gap between 11492-11635. The Sensex may consolidate by moving lower to fill this gap. 

The Sensex has moved past 50 Week M.A. which is at 11456. This 50 Week M.A. will now act as a support for the Sensex if it moves lower. This support will be extremely strong as it coincides with the gap (11430-11635) and the Trendline support. Hence, 11430 will act as a strong support. 

The Sensex is encountering a falling gap (12472-12284) created in October 2008 and this is acting as a strong resistance. This gap needs to be filled for any further upmove to take place. Sensex is moving up in a ‘Higher Top, Higher Bottom’ formation. The immediate higher bottom is at 10961 and another just below that at 10715. These bottoms will act as a support as and when the Sensex corrects its short term rise. Sensex is trading well above the 200 DMA. From the past history this 200 DMA (11083) will continue to provide strong support to Sensex.The Trendline Support is at 11432. 

For the week ahead the Resistance is at 12272-12514-12822. Support is at 11635-11430-11089-10715. 

NIFTY. 

Nifty opened the week at 3478, made a high of 3717, low of 3478, and closed on Thursday at 3620. Thus the weekly gain was 147 points. 

Nifty has formed Bearish Harami on the daily charts on Friday. This candlestick pattern suggests a reversal in the short term trend. The formation of this pattern signifies that the Nifty will have to touch the support level first before moving up. In the weekly charts the formation is not very bearish. The long upper shadow suggests selling pressure at higher levels. The Nifty has moved past 50 Week M.A. which is at 3472. This 50 Week M.A. will now act as a support for the Nifty if it moves lower. This will act as a strong support as it is even the low for the week which is 3478. Nifty is moving up in a ‘Higher Top, Higher Bottom’ formation. The immediate higher bottom is at 3351 and another just below that at 3296. These bottoms will act as a support as and when the Nifty corrects its short term rise. Nifty is trading well above the 200 DMA. From the past history this 200 DMA (3368) will continue to provide strong support to Nifty. 

Nifty O.I.PCR is at 1.27. Strong CALL writing is visible at Nifty strike of 3700 and strong PUT writing is visible at Nifty strike of 3400. It means that the Nifty will find strong overhead resistance at 3700 and strong support at 3400.The Nifty has Trendline Support at 3523.  

For the week ahead, the Resistance is at 3717-3790-3848. Support is at 3523-3478-3351-3296.  

INDEX LEVELS:

  
 S3S2S1CLOSER1R2R3
Nifty3351347835233620371737903848
Sensex11089114301163511876122721251412822

LAST WEEK’S RECOMMENDATIONS: 

There was a printing error for ACC, CMP was 654 and not 695 as printed. We regret the inconvenience caused to our readers due to the error in printing.Once again it was 100% as all our recommendations managed to reach the targets with ease. The star performer was ICICI Bank which went up by a whopping 20%!!! If one had bought one lot of each,  

STOCKLot SizeRecm.PriceTgtReachedProfit
Buy Infosys200150915851635Rs. 25,200
Buy RIL300180619001938Rs. 39,600
Buy ACC752654668682Rs. 21,056
Buy ICICI700479513575Rs. 67,200
Buy BEL5529559981039Rs. 46,368
Total Profit      Rs. 1,99,424

THIS WEEK’S RECOMMENDATIONS: 

PAIR NO.STOCKCMPSLTGT - 1TGT -2
1Buy ABG Shipyard151142163181
SellMc Dowell668681638612
2BuyEdelweiss332322350365
SellHDFC1736178816841644
3BuyOrchid Chem109105114119
SellHPCL246253236230

WATCH OUT FOR: 

Buy ABG Shipyard 151 SL 142 TGT 163 – 181.  

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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