Archives : BETWEEN 200DMA & 50DMA - 15/07/2011.

BETWEEN 200DMA & 50DMA – 15/07/2011.

5500-5750 - SHORT TERM TRADING ZONE.

After the stupendous run, the market seems to be consolidating between the 200dma on the higher side and the 50dma on the lower side. The market fell dramatically after testing the 200dma and it managed to take support at the 50dma. It is necessary the market spends some time in this zone between 5750 and 5500, so that it will have enough fire power to stage a strong rally on breakout.

 


BETWEEN 200DMA & 50DMA – 15/07/2011. 

5500-5750 - SHORT TERM TRADING ZONE.

After the stupendous run, the market seems to be consolidating between the 200dma on the higher side and the 50dma on the lower side. The market fell dramatically after testing the 200dma and it managed to take support at the 50dma. It is necessary the market spends some time in this zone between 5750 and 5500, so that it will have enough fire power to stage a strong rally on breakout.

TECHNICALLY SPEAKING.

.

The Sensex opened the week at 18823, made a high of 19619, a low of 18326 and closed the week at 18561. The Sensex lost 297 points on a weekly basis. Similarly Nifty opened the week at 5648, made a high of 5653, a low of 5496 and closed the week at 5581. The Nifty too closed with a weekly loss of 79 points.

 

The Nifty has formed a small body black candle on the weekly charts. For a Bearish reversal the candle should have been bigger (to form an Evening Star), but the candle body is small and the lower shadow is big. On the daily charts we have a small body black candle which is forming an Inside Day i.e. it is within the previous days trading range. The formation on Monday, Tuesday and Wednesday was a Downside Tasuki Gap formation. This is a continuation pattern suggesting continuation of the down move.

 

The candle stick pattern suggests short term bearishness and hence one needs to consider the correction of the immediate rise from Sensex 17314 to 19131 and Nifty 5195 to 5740. Correction levels will be 18437-18223-18008 for the Sensex and 5532-5468-5403 for the Nifty.

 

The market fell from the 200dma (Sensex – 19095 and Nifty – 5731) and it took support at the convergence of 50dma (Sensex – 18347 and Nifty – 5504) and 20dma (Sensex – 18446 and Nifty – 5537). Market is thus above the short term and medium term averages and well below the long term average. As a result, the short term trend and the medium term trends are bullish but the long term trend continues to remain down.

 

On the daily charts, the Flag pattern has failed as the market closed below the low of the Flag and i.e. below Sensex 18682 and Nifty 5610. If we have a weekly closing above Sensex 19067 and Nifty 5720, then we will have a Bullish breakout for a Descending Triangle. On the other hand, the Bearish H&S will get completed when the neckline which is actually a support trendline (Sensex 18072 and Nifty 5405) is breached on a weekly closing basis. Till then the neckline will continue to provide strong support to the indices. This weekly Bearish H&S will fail only when we have a weekly closing above Sensex - 19811 and Nifty – 5944.

 

If we consider the entire fall from 21108 to 17295 for the Sensex and 6338 to 5177 for the Nifty then the correction levels will be 18751-19202-19651 for the Sensex and 5621-5758-5895 for the Nifty. There is a strong resistance zone formed by the convergence of 200dma and 50% retracement of the entire fall. Thus Sensex 19095-19202 and Nifty 5731-5758 forms a strong Resistance Zone. This zone defines the long term outlook for the market and a weekly close above this zone will confirm a trend reversal in the long term.

MACD and ROC have just given fresh Sell signal. The MACD continues to be in positive zone while the ROC has just turned negative. The RSI is struggling at 52. Money Flow (60) and OBV continue in Buy mode. Stochastic oscillator is in Sell mode as %K has cut %D from above. The Directional Indicators continue to remain in Buy mode but the ADX has fallen below 20, suggesting a consolidation. 

Nifty O.I. PCR is at 1.12. Highest Open Interest build-up is seen at 5700 Call and 5500 Put. It suggests a range for the Nifty between 5500 on the lower side to 5700 on the higher side.

 

The Trendline Resistance for the Sensex is at 19067. The Trendline Support is at 18072.

 

The Trendline Resistance for the Nifty is at 5720. The Trendline Support is at 5405.

 

For the week ahead, Sensex will find Support at 18326-18082-17857 and will find Resistance at 18803-19074-19341.

 

For the week ahead, Nifty will find Support at 5496-5413-5328 and will find Resistance at 5653-5721-5801.

INDEX LEVELS: 

 S3S2S1CLOSER1R2R3
Nifty5328541354965581565357215801
Sensex17857180821832618561188031907419341

LAST WEEKS RECOMMENDATIONS:

Since the market started on the back-foot, majority of the stocks failed to reach their targets. 

STOCKReco. PriceTgtReachedLot SizeProfit
Buy HDiL1721791761000Rs.4,000
Buy DCB6266664000Rs.16,000
Buy AshokLey5255544000Rs.8,000
Buy Siemens915934930500Rs.7,500
Buy IndusInd2872952891000Rs.2,000
    TotalRs.37,500

THIS WEEKS RECOMMENDATIONS:

STOCKCMPSLTgt-1Tgt-2
Buy JetAir 506494521539
Buy Lupin484477493503
Buy AdaniPower113111117121
Buy ABNuvo920907941967
Buy TorntPower252247259267

WATCH OUT FOR:

Jet Air

Adani Power

  
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