Weekly analysis : CATCHING UP WITH THE NIFTY - 26/06/2020

CATCHING UP WITH THE NIFTY – 26/06/2020.

 

61.8% RETRACMENT STRIKES.

 

The current Rally was not only huge but also very sharp and fast. It is so typical of a Bear Market Rally which creates doubts in the minds of Market participants whether a Bull Market has resumed. Even though the Nifty has managed to close above the 200 WeeklyMA, the Weekly candlestick formation is a Neutral formation and raises doubts regarding the current Upward Rally. More importantly, both the indices hit a roadblock in the form of 61.8% Retracement (Nifty 10551) by forming a Bearish Engulfing on daily charts. This suggests a Short Term Reversal unless Nifty closes above 10553. Hence in the near term, Nifty can consolidate between 10500-10000.

 


CATCHING UP WITH THE NIFTY – 26/06/2020.

 

61.8% RETRACMENT STRIKES.

 

The current Rally was not only huge but also very sharp and fast. It is so typical of a Bear Market Rally which creates doubts in the minds of Market participants whether a Bull Market has resumed. Even though the Nifty has managed to close above the 200 WeeklyMA, the Weekly candlestick formation is a Neutral formation and raises doubts regarding the current Upward Rally. More importantly, both the indices hit a roadblock in the form of 61.8% Retracement (Nifty 10551) by forming a Bearish Engulfing on daily charts. This suggests a Short Term Reversal unless Nifty closes above 10553. Hence in the near term, Nifty can consolidate between 10500-10000.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 34892, made a high of 35706, low of 34499 and closed the week at 35171. Thus it closed the week with a gain of 440 points. At the same time the Nifty opened the week at 10318, made a high of 10553, low of 10194 and closed the week at 10383. Thus the Nifty closed the week with a gain of 139 points.

 

On the daily charts, both the indices have formed a Bearish Engulfing on Wednesday at the top suggesting a short term reversal. On Friday, both Sensex and Nifty have formed a Doji like formation with negligible shadows. On the weekly timeframe, both the indices have formed a White Body Spinning Top at the top which can have bearish connotations. Thus daily as well as weekly formation suggests a Bearish bias in the near term.

 

The WALL of RESISTANCES finally caught up with the Market as the strong Resistance of 61.8% (Sensex 35918 and Nifty 10551) halted the upward rally in the near term. In case this Resistance gets taken out, another very strong Resistance in the form of weekly Bearish Gap between Sensex 36950-37011 and Nifty 10751-10827 will follow. On the higher side, the 200dma (Sensex – 37010 and Nifty – 10901) will act as extremely strong hurdle to overcome.

 

Indices have immediate support in the form of Trendline Support which is at Sensex - 33702 and Nifty – 9900. Below this strong Support comes in the form of Bullish Gap on Weekly as well as Daily timeframe i.e. between Sensex 32876-32480 and Nifty 9706-9598.

 

Bullish Island still holds, whose failure point is below the Low of Opening White Body Marubuzo which is at Sensex 32348 and Nifty 9544. In case of a failure of Bullish Island, Market will go down to test the higher bottoms at Sensex 29968 / Nifty 8806.

 

Both the indices are well above the Short term average of 20dma (Sensex – 34195 and Nifty – 10097) as well as Medium term average of 50dma (Sensex – 32556 and Nifty 9576). Both the indices continue to remain below the Long term average of 200dma (Sensex – 37010 and Nifty – 10901). Thus the Trend in the Short term as well as Medium term Timeframe is Bullish, whereas the Trend in the Long term Timeframe continues to remain Bearish.

 

MACD as well as Price ROC are both positive and continue in Buy mode. RSI (64) suggests bullish momentum. Stochastic Oscillator %K (77) is below %D and hence in Sell mode. ADX (20) suggests Trend yet to be developed. Directional Indicators continue in Buy mode as +DI continues above -DI. MFI (46) suggests Negative Money Flow. OBV continues in Buy mode. Buy signal in Bollinger Band continues. Thus majority of Oscillators are suggesting a Bullish bias.

 

Options data for June series indicate highest Call Open Interest at the strike of 10500. Highest Put build-up is at the strike of 10000. Thus Options data suggest a trading range with Resistance at 10500 and Support at 10000.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

9731

9995

10194

10383

10553

10702

10827

Sensex

33354

33887

34499

35171

35706

36443

37011

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy EicherMotors

18473

18123

18998

19531

Buy Escorts

1017

996

1049

1082

Buy IPCALab

1700

1662

1757

1817

Buy EngineersInd

79

76

84

89

Buy TataPower

46

44

49

53

 

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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