Weekly analysis : SUPPORT ZONE HOLDS; 50DMA TO THE RESCUE - 11/10/2019

SUPPORT ZONE HOLDS; 50DMA TO THE RESCUE - 11/10/2019.

 

HIGHLY VOLATILE IN TRADING RANGE.

 

As pointed out in the previous week’s article, the market took Support at the Support Zone (11178-11090) mentioned last week. Despite being a truncated week, there was no shortage of Volatility. Each day saw both Sensex and Nifty drifting down and taking Support at the 50dma, and then bouncing back. Interestingly, the 100dma (Nifty 11407) is now acting as a Resistance. A close above the 100dma will lead the Nifty to 11692, and a close above that will lead the indices to new highs. A bearish break of the 50dma (11087) will take the Nifty down to critical Support zone near 10700. Since the indices have managed to turn the Trend Bullish, one can look for opportunities to buy at lower levels.

 


SUPPORT ZONE HOLDS; 50DMA TO THE RESCUE - 11/10/2019.

 

HIGHLY VOLATILE IN TRADING RANGE.

 

As pointed out in the previous week’s article, the market took Support at the Support Zone (11178-11090) mentioned last week. Despite being a truncated week, there was no shortage of Volatility. Each day saw both Sensex and Nifty drifting down and taking Support at the 50dma, and then bouncing back. Interestingly, the 100dma (Nifty 11407) is now acting as a Resistance. A close above the 100dma will lead the Nifty to 11692, and a close above that will lead the indices to new highs. A bearish break of the 50dma (11087) will take the Nifty down to critical Support zone near 10700. Since the indices have managed to turn the Trend Bullish, one can look for opportunities to buy at lower levels.

 

TECHNICALLY SPEAKING.

                                                                                  

Sensex opened the week at 37853, made a high of 38345, low of 37415 and closed the week at 38127. Thus it closed the week with a gain of 454 points. At the same time the Nifty opened the week at 11196, made a high of 11362, low of 11090 and closed the week at 11305. Thus the Nifty closed the week with a gain of 131 points.

 

On the daily charts, both Sensex and Nifty have formed a small white body candle almost like a Spinning Top. On the weekly charts both the indices have formed a Bullish Harami which is a Bullish reversal pattern but requiring confirmation. Thus both daily as well as weekly candlestick pattern study indicate a Bullish bias in the near term.

 

This week saw both the indices taking Support in the Support zone defined by moving averages i.e. Sensex 37702 (200dma) – 37451 (50dma) and Nifty 11235 (20dma) – 11087 (50dma). Interestingly each time the 50dma was tested, it not only provided strong Support but also the force to move higher. On the higher side 100dma (Sensex - 38318 and Nifty – 11407) is acting as a Resistance. A downside break of the critical 50dma will signal a Trend Reversal.

 

If the above mentioned Support Zone defined by the Moving Averages is broken especially the 50dma, then the Market is likely to move lower and test the strong long term Support Zone which is defined by the Confluence Zone of strong Weekly Trendline Support and 100 WeeksMA, which has given Support for 7 consecutive weeks for Sensex, Nifty and even Bank Nifty.

 

A close above 100dma will lead the indices to test their current intermittent peaks at Sensex 39441 and Nifty 11695. A close above these levels will mark the end of Correction and will signal a Reversal in long Term Trend.

 

This week, both the indices closed above the short term average of 20dma (Sensex – 37891 and Nifty – 11235), medium term average of 50dma (Sensex – 37451 and Nifty – 11087) and even the long term average of 200dma (Sensex – 37702 and Nifty – 11270). Thus the Trend in the short term, medium term as well as long term Timeframe has turned Bullish.

 

MACD and Price ROC both negative and in Sell mode. RSI (53) suggests Bullish momentum. Stochastic Oscillator %K (59) has gone above %D and hence is in Buy mode. ADX (16) suggests consolidation. Directional Indicators are in Buy mode as +DI has gone above –DI. MFI (52) suggests Positive Money Flow. Buy signal in Bollinger Band stands negated. Thus Oscillators are suggesting a mixed bias.

 

Options data for October series indicate highest Call Open Interest at 12000 and the highest Put build-up at the strike of 11000. Thus Options data suggests a trading range with resistance at 12000 and support at 11000.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10941

11078

11181

11305

11416

11554

11694

Sensex

36956

37415

37807

38127

38460

38870

39284

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Nestle

14032

13840

14339

14662

Buy AsianPaints

1790

1760

1836

1883

Buy BhartiAirtel

382

374

394

407

Buy TechMah

721

707

742

764

BuyGodrejCP

692

680

710

729

 

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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