Archives : CONSOLIDATION CONTINUES - 11/11/2011.

CONSOLIDATION CONTINUES   11/11/2011.

HOPE REMAINS ALIVE FOR THE BULLS.

The Resistance zone of Sensex 17788-17854 and Nifty 5332-5360 is proving to be too strong for the Bulls to break, at the moment. It is only natural that the market takes its time to consolidate before posting a breakout. Both the indices have just about managed to hold on above their strong Trendline support, the Oscillators are painting a mixed picture but the daily and weekly candlestick pattern formation suggests that some hope is still left for the bulls. This week’s black body candle is inside the big white body of the candle formed two weeks back. Last two weeks candle, even though black, were small body candles and hence it can be said that the market is taking a breather. Hope for the Bulls will stay afloat, if the next week does not close below Sensex 16898 and Nifty 5084. If this is to happen then we may overall be a part of a larger Bullish Continuation pattern formation called Rising Three Method.

 

 

 


CONSOLIDATION CONTINUES   11/11/2011.  

HOPE REMAINS ALIVE FOR THE BULLS.

The Resistance zone of Sensex 17788-17854 and Nifty 5332-5360 is proving to be too strong for the Bulls to break, at the moment. It is only natural that the market takes its time to consolidate before posting a breakout. Both the indices have just about managed to hold on above their strong Trendline support, the Oscillators are painting a mixed picture but the daily and weekly candlestick pattern formation suggests that some hope is still left for the bulls. This week’s black body candle is inside the big white body of the candle formed two weeks back. Last two weeks candle, even though black, were small body candles and hence it can be said that the market is taking a breather. Hope for the Bulls will stay afloat, if the next week does not close below Sensex 16898 and Nifty 5084. If this is to happen then we may overall be a part of a larger Bullish Continuation pattern formation called Rising Three Method.

TECHNICALLY SPEAKING.

The Sensex opened the week at 17593, made a high of 17658, a low of 17096 and closed the week at 17192. The Sensex lost 370 points on a weekly basis. Similarly Nifty opened the week at 5292, made a high of 5317, a low of 5142 and closed the week at 5168. The Nifty too closed with a weekly loss of 116 points.

 

Sensex has formed a Bullish Doji formation on the daily charts on Friday. This formation can result in a Bullish price reversal pattern if the next days candle opens with a gap and continues moving higher, forming a white body candle. On the Nifty, there is a small white body formation which is like a Star formation, but a Bullish price reversal will be confirmed only if a white body candle is formed on the daily charts on Monday. As far as the weekly charts are concerned, both Sensex and Nifty have formed a black body candle just like previous weeks formation. Interestingly just as previous weeks black body candle which was formed within the top half of the big white body candle formed two weeks back, this week too has formed a small black body candle which is also contained within the big white body candle formed two weeks back. We may be in the process of forming a larger bullish Continuation pattern called the Rising Three Method. According to this formation, last two weeks candle were like Rest periods and this can even continue for one more week i.e. a black body candle formation for the next week is acceptable but the weekly closing for the indices should not be below Sensex 16898 and Nifty 5084. The pattern will be deemed complete when we form a big white body candle which will have a weekly close above Sensex 17804 and Nifty 5360. These are all probabilities which show different possibilities but candlestick analysis clearly suggests that all is not lost for the Bulls, hope remains.

In the short term the indices are correcting the recent rise from Sensex 15745 to 17908 and Nifty 4720 to 5399. The correction levels (which should act as support) in that case are Sensex 17082-16826-16571 and 5140-5059-4979 for the Nifty. Interestingly the low made for the current week matches with the 38.2% Retracement level and also the Trendline Support for both Sensex and Nifty.

Market is currently facing a strong resistance zone between Sensex 17788-17845 and Nifty 5332-5360. This resistance zone is formed by the convergence of the 61.8% of the immediate fall, 50% of the intermediate fall and 38.2% of the entire fall. This is further strengthened by the presence of Falling Gap and the 200dma. Thus we have strong Resistance Zone between Sensex 17788-17845 and Nifty 5332-5360.

Once again both Sensex and Nifty have just closed below the short term average of 20dma (Sensex – 17230 and Nifty – 5183) and as a result the short term trend has turned down. Still both the indices continue to trade above their medium term average of 50dma (Sensex – 16825 and Nifty – 5057). As a result the medium term trend remains up. Both the indices continue to remain below the 200dma (Sensex – 17952 and Nifty – 5390). As a result the long term trend continues to remain down. Moving Average Trend Analysis clearly reflect a conflict in the direction of the trend for different time-frames which should clearly help Volatility to climb further.

Both the indices were moving within a well defined trading range i.e. between Sensex 15745 to 17211 and Nifty 4720 to 5170 for a period of more than three months. The top and bottom end of the trading range had been tested four times without getting breached. Finally this Trading Range was breached and the target for this Trading Range Breakout falls at Sensex 18692 and Nifty 5631.

Since last Deepawali, both the indices have been moving lower in a Falling Channel and the top end of the Falling Channel falls at Sensex 18167 and Nifty 5461. This level should act as good Resistance level. On a longer term timeframe the Bearish Head & Shoulders on the weekly charts still stand, as long as the Nifty remains below 5740.

Oscillators are painting a mixed picture as MACD has just given a Sell even though in positive zone. ROC continues to remain in positive territory and as a result Buy mode continues. RSI is just above the centerline and as a result it continues in Buy mode. Stochastic Oscillator has given a fresh Sell signal as %K is below %D. ADX continues to remain low at 18 suggesting that the index is consolidating in sideways mode. Directional Indicators continue in Buy mode as +DI is still above –DI, but the interesting part of Directional Indicators is that they are converging. MFI continues to remain below the centerline and as a result it continues with its Sell indication. OBV is not very conclusive as a minor higher top is in place but a higher bottom is yet to be confirmed. Bollinger Band which had given a Buy signal two weeks back has had the stop loss getting triggered as the indices have closed below the 20dma.

Nifty OI PCR is at 1.27. 5400 strike is having highest Call buildup and highest Put writing is seen at 5000 strike price. Thus Nifty is expected to move in a range of 5000 to 5400. 

Trendline Resistance for the Sensex is at 17757. Trendline Support for the Sensex is at 17185.

Trendline Resistance for the Nifty is at 5354. Trendline Support for the Nifty will be at 5151.

For the week ahead, Sensex will find Support at 16928-16673-16432 and will find Resistance at 17469-17752-17982.

For the week ahead, Nifty will find Support at 5084-5001-4911 and will find Resistance at 5252-5326-5399.

INDEX LEVELS:

.

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

4911

5001

5084

5168

5252

5326

5399

Sensex

16432

16673

16928

17192

17469

17752

17982

LAST WEEKS RECOMMENDATIONS:

.

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy AsianPnt

3226

3284

3256

125

Rs.3,750

Buy BFUtiL

509

522

529

500

Rs.10,000

Buy DeltaCorp

101

105

104

2000

Rs.6,000

Buy JindalSW

598

638

674

250

Rs.19,000

Buy RiiL

429

441

440

500

Rs.5,500

Total

Rs.44,250

THIS WEEKS RECOMMENDATIONS:

.

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy HeroHonda

2172

2146

2213

2257

Buy Wipro

382

377

392

403

Buy UltraTech

1176

1163

1196

1219

Buy IGL

428

423

439

451

Buy BajajAuto

1745

1730

1768

1792

WATCH OUT FOR:

IGL

      
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