Archives : EARLY SIGNS OF REVERSAL - 13/01/2012.

EARLY SIGNS OF REVERSAL   13/01/2012.

MARKET ABOVE 200 Weeks Moving Average.

The market continued to build on the good work of the last week and as a result this week the market has managed to stay above the 200 Weeks Moving Average (Sensex – 15876 and Nifty – 4766). Besides this the market has already conquered the short term moving average of 20dma and is currently testing the medium term average of 50dma. One cannot simply ignore such reversal signals but at the same time such price reversals need not always result in a long term trend reversal.

 


EARLY SIGNS OF REVERSAL   13/01/2012.

MARKET ABOVE 200 Weeks Moving Average.

The market continued to build on the good work of the last week and as a result this week the market has managed to stay above the 200 Weeks Moving Average (Sensex – 15876 and Nifty – 4766). Besides this the market has already conquered the short term moving average of 20dma and is currently testing the medium term average of 50dma. One cannot simply ignore such reversal signals but at the same time such price reversals need not always result in a long term trend reversal.

 

TECHNICALLY SPEAKING.

.

Sensex opened the week at 15840, made a high of 16257, low of 15678 and closed the week at 16154. Thus it registered a weekly gain of 306 points. At the same time the Nifty opened the week at 4747, made a high of 4898, low of 4695 and closed the week at 4866. Thus the Nifty went up by 120 points on a weekly basis.

The formation for the week is a white body candle which comes on the back of another white body candle formed a week before. This formation will be imparting bullishness to the upward movement. On the daily charts, both Sensex and Nifty have formed a Bullish Tri-Star formation. This pattern formation is very rare as it requires three Doji formations in a particular sequence. In case of both Sensex and Nifty, we have neutral formation like a Spinning Top formed on Thursday. Also it is interesting to note that this pattern is acting as a Bullish Continuation pattern. A white body candle on Monday will confirm the Bullish Continuation as suggested by this pattern.

Short term Trend has reversed as the Sensex and Nifty continue to stay above their short term average of 20dma (Sensex – 15813 and Nifty – 4737). Both Sensex and Nifty are now testing the medium term average of 50dma (Sensex – 16175 and Nifty – 4851). Interestingly the Nifty has managed a close above the 50dma, even as the Sensex has just remained below the coveted level. Both Sensex and Nifty continue to be below the long term average of 200dma (Sensex – 17453 and Nifty – 5240). As a result the Short term trend has turned Bullish, while the Medium term trend is being tested and the Long term trend continues to be Bearish. Besides this, both the indices have finally, after three weeks, managed a close above their 200 Weeks moving average (Sensex – 15876 and Nifty – 4766). This will help the bullishness to gain further strength.

Both Sensex and Nifty are encountering a strong Resistance zone between Sensex 16194 – 16289 and Nifty 4863 – 4882. This Resistance zone has been formed by the convergence of the 61.8% Retracement of the short term fall, 38.2% of the intermediate fall and also the important 50dma.

If the market manages to close above the Resistance zone then both the indices will move upwards to tackle the Falling Gap which is between 16382 – 16421 for the Sensex and between 4918 – 4921 for the Nifty. This gap holds lot of significance as this gap is also a part of the Bearish Island Reversal. The market will need a close above Sensex 17003 and Nifty 5099 to completely remove the bearish effect of the Island Reversal.

Both Sensex and Nifty have just completed an Ascending Triangle formation. The target according to this pattern falls at Sensex – 16948 and Nifty – 5075.

For more than a year, both the indices have been moving lower in a Falling Channel. In case of the indices breaching their recent lows, the market will fall to test the lower end of the Falling Channel, which should act as support. The support levels are at Sensex 14632 and Nifty 4379. The top end of the channel will provide resistance, is at Sensex 17452 and Nifty 5271. On a longer term timeframe the Bearish Head & Shoulders and Bearish Descending Triangle on the weekly charts still stand, and so do their targets. The target for the Bearish Head and Shoulders pattern on the weekly charts stands at Sensex 14651-13928 and Nifty 4357-4143. This target holds true as long as the Nifty stays below 5740.

The market is correcting the entire rise from 7697 to 21108 for the Sensex and 2252 to 6338 for the Nifty. The market has already breached and is below the 38.2% of the above mentioned rise. If the bearishness continues then it is likely to move towards the next Fibonacci Retracement levels of 50% and 61.8% levels of the entire fall for the Sensex and Nifty. Those levels are 14402-12820 for the Sensex and 4295-3813 for the Nifty.

The Golden Ratio Target of the current rise of Sensex from 15765 to 17908 and Nifty from 4720 to 5399, falls at Sensex 14440 and Nifty 4300. This level coincides with the 50% Retracement level of the entire rise (Sensex – 14402 and Nifty – 4295) and hence we have a confluence zone between Sensex 14440-14402 and Nifty 4300-4295. This zone will act as strong support for both the indices.

MACD continues with its Buy signal and has just turned positive. ROC is in positive zone and continues with its Buy signal. RSI is at 54 and is currently generating a Buy signal. Stochastic Oscillator has reached overbought zone as %K is at 85. Directional Indicators have given a fresh Buy signal as +DI has moved above –DI. ADX is at 13, indicating lack of any trend. MFI is consolidating below the centerline and is currently at 45. OBV has just about managed a higher top higher bottom trajectory.

Nifty OI PCR is at a level of 1.39. Highest Open Interest is seen at 4700 Put. Highest Call writing is seen at 5000 strike. Hence one can expect Nifty to move in a band of 4700 on the lower side and 5000 on the higher side.

Trendline Resistance for the Sensex is at 17013. Trendline Support for the Sensex is at 15634. 

Trendline Resistance for the Nifty is at 5138. Trendline Support for the Nifty falls at 4654.

For the week ahead, Sensex will find Support at 15849-15517-15189 and will find Resistance at 16488-16833-17188.

For the week ahead, Nifty will find Support at 4758-4646-4538 and will find Resistance at 4965-5059-5148.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

4538

4646

4758

4866

4965

5059

5148

Sensex

15189

15517

15849

16154

16488

16833

17188

LAST WEEKS RECOMMENDATIONS:

It was a superb week for our readers as all the stocks reached their targets with ease. The Star Performers of the week were RCom and MTNL which went up by an amazing 16% !!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy RCom

77

85

89

2000

Rs.24,000

Buy HDFCBk

453

472

473

500

Rs.10,000

Buy Polaris

129

139

143

2000

Rs.28,000

Buy Aban

352

371

383

500

Rs.15,500

Buy MTNL

25

29

29

8000

Rs.32,000

Total

Rs.1,09,500

THIS WEEKS RECOMMENDATIONS: 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy LiCHsg

241

238

247

254

Buy ITC

207

205

211

216

Buy BeML

1520

1503

1543

1568

Buy Escorts

76

74

79

83

Buy Jindal S-W

466

457

480

496

WATCH OUT FOR:

LIC Hsg

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