Weekly analysis : TESTING THE R-ZONE - 16/11/2018.

TESTING THE R-ZONE - 16/11/2018.

 

NEARING THE UPPER END OF TRADING RANGE.

 

The markets are in a Trading Range, moving in a copy-book style between lower boundary of Nifty 10000 to the upper boundary of Nifty 10700. After testing the lower boundary three weeks back, the Nifty is now testing the upper boundary. Interestingly we are poised with strong Resistances just above the upper end of the trading range viz. the Bearish Gap 10754-10843 along with the long term average of 200dma (10754). Hence even if Nifty moves above the trading Range, it will find difficulty in crossing over the Resistance zone defined by the Bearish Gap.

 

NEARING THE 50 WEEKSMA.

 

Three weeks back, Nifty took support at the 100 WeeksMA (10099) for two consecutive weeks and staged a Pull-Back Rally from there. Currently, we have reached near the 50 WeeksMA (10723) and it will be an interesting retest of this level. A close above 50 WeeksMA on a weekly closing basis will propel the rally towards the Nifty 11000 mark. Whereas a failure to close above the 50 WeeksMA will push the prices back lower, potentially towards the lower Support of 100 WeeksMA.

 


TESTING THE R-ZONE - 16/11/2018.


NEARING THE UPPER END OF TRADING RANGE.


The markets are in a Trading Range, moving in a copy-book style between lower boundary of Nifty 10000 to the upper boundary of Nifty 10700. After testing the lower boundary three weeks back, the Nifty is now testing the upper boundary. Interestingly we are poised with strong Resistances just above the upper end of the trading range viz. the Bearish Gap 10754-10843 along with the long term average of 200dma (10754). Hence even if Nifty moves above the trading Range, it will find difficulty in crossing over the Resistance zone defined by the Bearish Gap.

 

NEARING THE 50 WEEKSMA.

 

Three weeks back, Nifty took support at the 100 WeeksMA (10099) for two consecutive weeks and staged a Pull-Back Rally from there. Currently, we have reached near the 50 WeeksMA (10723) and it will be an interesting retest of this level. A close above 50 WeeksMA on a weekly closing basis will propel the rally towards the Nifty 11000 mark. Whereas a failure to close above the 50 WeeksMA will push the prices back lower, potentially towards the lower Support of 100 WeeksMA.


TECHNICALLY SPEAKING.


Sensex opened the week at 35287, made a high of 35545, low of 34672 and closed the week at 35457. Thus it closed the week with a gain of 299 points. At the same time the Nifty opened the week at 10607, made a high of 10695, low of 10440 and closed the week at 10682. Thus the Nifty closed the week with a gain of 97 points.

 

On the daily charts, both Sensex and Nifty have formed a small white body candle. On the weekly timeframe, both the indices have formed a small white body candle with a long lower shadow. The lower shadow indicates, buying at lower levels. Thus daily as well as weekly candlestick pattern suggests a mildly Bullish bias.

 

The Indices are in a trading Range between Sensex 35600-33300 and Nifty 10700-10000. Currently we are nearing the upper end of this Trading Range and a break of this will lead the market higher to test the Strong Resistance Zone in the form of Bearish Gap between Sensex 35820-35911 and Nifty 10754-10843. This Gap is accompanied by the Nifty 200dma which makes it stronger and hence difficult to cross.

 

Markets are in a Pull-Back mode and the relevant Retracement levels are placed at Sensex 35468-36140-36813 and 10675-10882-11089 for the Nifty. Currently we are testing the 38.2% Retracement level and we can term this Pull-Back Rally into a Reversal only if we sustain above the level of Sensex 36813 and Nifty 11089.

 

Once the Pull-back is done, Correction of higher degree will resume. Intermediate Correction levels are placed at Sensex 33920-32354-30788 and Nifty 10283-9827-9371. Higher degree Correction levels are placed at Sensex 32688-30742-28796 and Nifty 9875-9293-8710. Thus we have two confluence zones which will act as Support Zones. First Confluence Support Zone is between Sensex 32688-32354 and Nifty 9875-9827. Second Confluence Support Zone falls between Sensex 30788-30724 and Nifty 9371-9293.

 

This week, both the indices have managed a close above the short term average of 20dma (Sensex – 34568 and Nifty – 10401. Both the indices still continue to remain below the medium term average of 50dma (Sensex – 35673 and Nifty – 10750) and even the long term average of 200dma (Sensex – 35406 and Nifty – 10754). Thus the trend in short term has turned Bullish, whereas the trend in the medium term as well as the long term timeframe remains down.

 

MACD and Price ROC are both in Buy mode. RSI (56) suggests continuation of Bullish momentum. Stochastic Oscillator %K (93) is above %D and hence in Buy mode. ADX (20) suggests that the Down Trend has lost all its strength. Directional Indicators are in a Buy mode as +DI has gone above –DI. MFI (78) suggests Positive Money Flow. OBV is making lower top lower bottom formation. Oscillators are suggesting a bullish bias.

 

Options data for November series indicate highest Call Open Interest is at the strike of 10800 whereas the highest Put build-up is at the strike of 10000. Thus Options data suggests a wide trading range with resistance at 10800 & support at 10000.


INDEX LEVELS:


 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10380

10482

10594

10682

10770

10866

10976

Sensex

34302

34672

35006

35457

35820

36170

36443

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

EicherMotors

24735

24199

25540

26355

Buy Britannia

5947

5863

6074

6207

Buy PEL

2345

2300

2413

2483

Buy CoLPaL

1147

1123

1183

1223

Buy BoB

115

112

120

126


WATCH OUT FOR:

 

BoB

 

 

 

 

 

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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