Archives : 5730-5630 - SHORT TERM RANGE FOR THE NIFTY - 19/10/2012.

5730 - 5630 – SHORT TERM RANGE FOR THE NIFTY – 19/10/2012.

RANGE BREAKOUT SOON.

The trading range for the Nifty has got narrower and now it has settled in a small range of just 100 points. Sensex is moving in a small range between 18850-18550 and Nifty between 5730-5630 for nearly two weeks now. A breach on the upside will not only lead the market towards the intermittent top at Sensex 19137 and Nifty 5815, but also confirm that the minor correction is over and prior uptrend has resumed. Whereas, if the indices breach the lower boundary, then a bearish pattern will get completed and it will lead to testing of the bullish gap between Sensex 18284-18062 and Nifty 5526-5447.

  


5730 - 5630 – SHORT TERM RANGE FOR THE NIFTY – 19/10/2012.

RANGE BREAKOUT SOON.

The trading range for the Nifty has got narrower and now it has settled in a small range of just 100 points. Sensex is moving in a small range between 18850-18550 and Nifty between 5730-5630 for nearly two weeks now. A breach on the upside will not only lead the market towards the intermittent top at Sensex 19137 and Nifty 5815, but also confirm that the minor correction is over and prior uptrend has resumed. Whereas, if the indices breach the lower boundary, then a bearish pattern will get completed and it will lead to testing of the bullish gap between Sensex 18284-18062 and Nifty 5526-5447.

TECHNICALLY SPEAKING. 

Sensex opened the week at 18690, made a high of 18806, low of 18535 and closed the week at 18682. Thus it registered a small weekly gain of 7 points. At the same time the Nifty opened the week at 5674, made a high of 5722, low of 5633 and closed the week at 5684. Thus the Nifty went up by 8 points on a weekly basis.

Both Sensex and Nifty has formed a Bearish Harami on the daily charts, but it cannot be classified as that because for a Bearish Harami, the prior trend should be up; but here the prior trend is sideways. On the weekly chart Sensex has formed a Doji. This Doji has occurred after the Bearish Engulfing got completed last week. A real black body candle would have confirmed bearishness, but Doji is now creating uncertainty. It could have been a Bullish Harami Cross if the prior trend on the weekly charts was down, but that is not the case here. Nifty has formed a Spinning Top with a small white body which is also a neutral formation. Hence a lot now depends on the next weeks candle formation.

The current correction is a result of profit booking and also it is a result of the price reaching the target of the primary basic pattern which was at Sensex 19116 and Nifty 5788. The primary basic pattern was due to the fall from Sensex 17432 to 15748 and Nifty 5279 to 4770.

Currently Sensex is moving in a small range of 300 points and Nifty 100 points. A close below Sensex 18535 and Nifty 5633 will once again resume the retracement of the immediate rise of Sensex from 17250 to 19137 and 5215 to 5815 for the Nifty. The Retracement levels for the Sensex are at 18416-18193-17971 and 5586-5515-5444 for the Nifty.

A Bullish Rising Gap between Sensex 18062-18284 and Nifty 5447-5526 has acted as a strong support for the market before as the Sensex had bounced back from a low 18291 and Nifty 5534. This gap holds more significance because the 50% Retracement of the immediate rise from 17250 to 19137 for the Sensex and 5215 to 5815 for the Nifty (which is at 18193 and 5515) is also within the Gap mentioned above.

On the weekly charts, both Sensex and Nifty have formed a Bullish Diamond pattern and the target as per this formation is Sensex 20171 and Nifty 6192. The targets will be achieved as long as the market stays above Sensex 15748 and Nifty 4770.

The short term average of 20dma (Sensex – 18738 and Nifty – 5692) was finally breached this week after being tested for the entire week. But the market continues to be well above its medium term average of 50dma (Sensex – 18154 and Nifty – 5502) and the long term average of 200dma (Sensex – 17337 and Nifty – 5256). Thus the trend in the short term has turned down, while the medium term and the long term timeframe continue to be bullish.

Market had tested the Falling Channel Top and bounced back from there. Hence the overall long term target for Falling Channel pattern breakout remains intact. The targets as per this formation are Sensex 20383 and Nifty 6148.

MACD even though positive is under Sell mode. Also ROC continues to remain in Sell mode by being below the centerline. RSI has fallen to 55 and indicates a fall in bullish momentum. Stochastic Oscillator is in Buy mode as %K (26) is above %D. ADX continues to be higher at 39 indicating that the uptrend is still strong. The Directional Indicators i.e. +DI and –DI continue with their buy signal but are converging now. Money Flow has moved below the centerline to 44, indicating selling. OBV continues to remain sideways. The stop loss of the Buy signal generated by the Bollinger Band has been triggered, as the 20dma has been breached.

The Nifty O.I. PCR continues to be lower at 0.91. For the November Series, highest Open interest build up is seen at 6000 Call and 5600 Put. This suggests that the market expects a trading range with strong support coming in at around 5600 and resistance at around 6000 levels for the next month. Friday saw increased Call writing at the strike of 5800 in the current month, which means that the market will face immediate resistance at that level.

Trendline Support for the Sensex is at 18434. Trendline Resistance for the Sensex is at 19181.

Trendline Support for the Nifty falls at 5584. Trendline Resistance for the Nifty falls at 5827.

For the week ahead, Sensex will find Support at 18411-18131-17852 and will find Resistance at 19031-19341-19697.

For the week ahead, Nifty will find Support at 5586-5499-5393 and will find Resistance at 5772-5863-5944.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5393

5499

5586

5684

5772

5863

5944

Sensex

17852

18131

18411

18682

19031

19341

19697

LAST WEEKS RECOMMENDATIONS:

Majority of the recommendations did well and reached their targets with ease, with the exception of Bhushan Steel. But the Star performers of the week were GMDC and Divis Lab which went up by around 6% and 5% respectively!!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy Divis

1142

1195

1198

500

Rs.28,000

Bhushan

504

517

508

1000

Rs. 4,000

Buy Titan

274

281

282

1000

Rs. 8,000

Buy GMDC

205

212

217

2000

Rs.24,000

Buy Ceat

117

122

123

2000

Rs.12,000

Total

Rs.76,000

THIS WEEKS RECOMMENDATIONS:

This week is expected to be very volatile and hence Pair Strategies are suggested. 

PAIR NO.

STOCK

CMP

SL

TGT - 1

TGT -2

1

Buy

Petronet

169

166

174

180

Sell

Chambal

68

70

65

62

2

Buy

CanBank

447

435

463

481

Sell

Cipla

359

364

351

342

3

Buy

Andhra

114

112

118

123

Sell

Hindalco

115

118

110

105

WATCH OUT FOR:

Chambal Fert

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.

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