Archives : BULLISH BIAS IN A RANGE - 22/07/2011.

BULLISH BIAS IN A RANGE – 22/07/2011.

BULLISH REVERSAL PATTERN SEEN.

As expected the market continued to oscillate in the trading range of 5500 to 5750 which is defined by the two moving averages i.e. the medium term trend decider 50dma and the long term trend decider 200dma. But the bias towards the end of the week has turned positive as the market managed to close above the strong resistance level of 5610 on the Nifty. In the process, a bullish reversal candlestick pattern is in place on the daily charts as well as weekly charts.

 


BULLISH BIAS IN A RANGE – 22/07/2011.

BULLISH REVERSAL PATTERN SEEN.

As expected the market continued to oscillate in the trading range of 5500 to 5750 which is defined by the two moving averages i.e. the medium term trend decider 50dma and the long term trend decider 200dma. But the bias towards the end of the week has turned positive as the market managed to close above the strong resistance level of 5610 on the Nifty. In the process, a bullish reversal candlestick pattern is in place on the daily charts as well as weekly charts.

TECHNICALLY SPEAKING. 

The Sensex opened the week at 18592, made a high of 18765, a low of 18415 and closed the week at 18722. The Sensex gained 161 points on a weekly basis. Similarly Nifty opened the week at 5581, made a high of 5645, a low of 5532 and closed the week at 5633. The Nifty too closed with a weekly gain of 52 points.

 

Both Sensex and Nifty have formed a Bullish Reversal pattern on the daily as well as weekly charts. On the daily charts, a Morning Star pattern has been observed; which is a bullish reversal pattern. This pattern does not require any further confirmation for the reversal. On the weekly charts we have a Bullish Harami pattern visible on both the indices. Bullish Reversal on the weekly charts will require a confirmation in the form of a white body candle in the next week. Hence both weekly and daily charts suggest a price reversal in the short term time frame.

 

The market is moving well within the trading range defined by the two moving averages i.e. the 200dma and the 50dma. Both the indices are facing resistance at the 200dma (Sensex – 19049 and Nifty – 5717) and are getting support at the 50dma (Sensex – 18353 and Nifty 5509). As per the classical theory, the market is consolidating and gathering strength to breach a bigger and a stronger resistance level. The short term and medium trends are positive as both the indices are above their 20dma and 50dma respectively. The long term trend continues to be negative as both the indices are below their 200dma.

 

If we have a weekly closing above Sensex 19014 and Nifty 5704, 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 18146 and Nifty 5429) 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, previous intermittent top and 50% retracement of the entire fall. Thus Sensex 19049-19202 and Nifty 5717-5758 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.

The daily candle stick pattern suggests bullishness in the short term. The Morning Star formed on the daily charts will cease to be bullish only if the market falls and closes below Sensex 18415 and Nifty 5532. Till then the market is likely to move higher and test the strong resistance zone between Sensex 19049-19202 and Nifty 5717-5758.

 

Oscillators are painting a mixed picture as the MACD continues with its Sell signal even though in positive territory. ROC has just managed to turn positive and in process managed a Buy signal. RSI is once moving above 50, signaling an increase in the market momentum. Money Flow has fallen to 42 and is in Sell mode suggesting money flowing out of the market. The other lead indicator OBV also does not inspire much confidence. Stochastic oscillator has just signaled a Buy as %K has cut %D from below. The Directional Indicators continue to remain in Buy mode but the ADX is hovering at 21suggesting a weak trend.

 

Nifty O.I. PCR has improved and is at 1.23. Highest Open Interest build-up is seen at 5800 Call and 5500 Put. It suggests a range for the Nifty between 5500 on the lower side to 5800 on the higher side. For the August series, there is good buildup visible at 5700 Call and 5400 Put.

 

The Trendline Resistance for the Sensex is at 19014. The Trendline Support is at 18146.

 

The Trendline Resistance for the Nifty is at 5704. The Trendline Support is at 5429.

 

For the week ahead, Sensex will find Support at 18534-18326-18120 and will find Resistance at 18936-19131-19342.

 

For the week ahead, Nifty will find Support at 5567-5496-5429 and will find Resistance at 5690-5747-5801.

 

 

INDEX LEVELS:

 S3S2S1CLOSER1R2R3
Nifty5429549655675633569057475801
Sensex18120183261853418722189361913119342

LAST WEEKS RECOMMENDATIONS:  

STOCKReco. PriceTgtReachedLot SizeProfit
Buy JetAir506521518500Rs.6,000
Buy Lupin4844934891000Rs.5,000
Buy AdaniPow1131171152000Rs.4,000
Buy ABNuvo920941934250Rs.3,500
Buy TorntPwr2522592561000Rs.3,000
    TotalRs.21,500

THIS WEEKS RECOMMENDATIONS:  

STOCKCMPSLTgt-1Tgt-2
Buy ACC 99598310121031
Buy PantaloonRet333327341350
Buy AllahabadBnk218214225232
Buy PNB1169115411921217
Buy ChambalFert86848993

WATCH OUT FOR:

Pantaloon Retail

Allahabad Bank

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.

Copyright © 2000 - 2018 Jatin Sanghavi. All rights reserved.
No part of the material on this website may be reproduced or distributed in any forms or by any means, electronics or mechanical without the written permission of the author.
Sitemap