The Sensex opened the week at 18169, made a high of 18475, a low of 17997 and closed the week at 18401. The Sensex gained 234 points on a weekly basis. Similarly Nifty opened the week at 5452, made a high of 5546, a low of 5397 and closed the week at 5530. The Nifty too closed with the week with a gain of 78 points.
On the weekly charts both Sensex and Nifty have formed a big white body bullish candle, which is likely to have bullish implications for the coming week. Since last week’s formation was a neutral formation, this week’s bullish candle formation assumes significance.
This week, both Sensex and Nifty took support at 17997 and 5397 respectively, which were just above the last weeks low (Sensex – 17914 and Nifty – 5372). Hence strong support will be seen in the Sensex zone between 17997-17914 and Nifty zone of 5372-5349.
If we look at broader picture, both Sensex and Nifty have managed a close above 78.6% of the entire previous fall of the Sensex from 21206 to 7697 and Nifty from 6357 to 2252. 78.6% retracement levels for the Sensex falls at 18315 and for the Nifty, it is at 5478. Since both the indices have managed a close above their 78.6% retracement levels, it is likely that both the indices will now climb towards their previous high i.e. Sensex 21206 and Nifty 6357.
Since last October, the market is moving in a rising channel and the channel top has provided strong resistance to the market and that supply trendline top falls at Sensex 18458 and Nifty 5541
. For a while market traded above the supply trendline and even closed above that level on Thursday. But once again on Friday, the market fought with the supply trendline but managed a close just below that channel top. For the market to continue with its current upmove, it is necessary that the market close above trendline top and also trade above that.
In the current upmove both the indices have registered higher bottom formation. Sensex has formed higher bottoms at 17838-17373 and Nifty has formed higher bottoms at 5349-5210. The short term trend will be in danger only if both the indices close below their first higher bottoms i.e. Sensex – 17838 and Nifty – 5349. In such a case a short term down trend will be triggered and the market will then head towards next major higher bottom which is at Sensex 17373 and Nifty 5210. Short term trend will remain intact as long as the Sensex stays above 17838 and Nifty remains above 5349. One need not worry about the medium term as long as the level of 17373 for the Sensex and 5210 for the Nifty remains intact.
As long as the market remains above the 20dma, the short term trend will remain positive. The 20dma for the Sensex falls at 18133 and Nifty at 5443. The intermediate trend will be reversed from up to down, if the 50dma is breached. 50dma for the Sensex is at 17890 and Nifty 5368.
Oscillators are getting more positive. MACD has just given a Buy signal and is in a positive territory. RSI (62) is in a Buy mode and is moving higher, suggesting strong momentum ahead. ROC continues in its buy mode by staying in the positive zone. Stochastic oscillator continues with its Buy signal as % K is above % D. Fast Stochastic has entered overbought territory and is currently at 90, but slow stochastic is still at 74. The OBV continues in its buy mode, but it has not crossed the previous high. The Money Flow Index (57) has signaled a Buy and is now moving higher suggesting inflow of money. The ADX is increasing and is currently at 26 suggesting the current trend is gaining strength. The Directional Indicators continue to be in buy mode and are once again diverging, which is a positive signal for the bulls.
Both Sensex and Nifty had completed a Bullish Flag pattern breakout and as a result the target for that will be Sensex – 18732 and Nifty – 5609.
For the September series, strong Open Interest build up is seen at 5300 and 5400 strike Put and hence these levels are expected to provide strong support. Strong Call writing is visible at the strike of 5600. The data clearly suggests that the Nifty is likely to move in a trading range from 5300 on the lower side to 5600 on the higher side.
Sensex has strong Trendline Resistance at 18676. The trendline support for the Sensex is at 17975-17808.
Nifty has strong Trendline Resistance at 5702. The trendline support for the Nifty is at 5391-5338.
For the week ahead, Sensex will find Support at 18260-18118-17997 and will find Resistance at 18538-18676-18795.
For the week ahead, Nifty will find Support at 5487-5444-5397 and will find Resistance at 5568-5609-5653.