Archives : JUNE SERIES STARTS ON A BEARISH NOTE - 31/05/2013.

JUNE SERIES STARTS ON A BEARISH NOTE – 31/05/2013.

SHORT TERM TREND BEARISH.

Nifty rollover for the June series was much lower than average recent rollovers. The way the indices have reacted from the top does not augur well for the Bulls. If the Sensex happens to close below the level of 19499 and Nifty below 5912, then a bearish topping out pattern will have got completed which will take the market further down. Currently only the short term trend is bearish while the medium and long term trend still remains positive.

  


JUNE SERIES STARTS ON A BEARISH NOTE – 31/05/2013.

SHORT TERM TREND BEARISH.

Nifty rollover for the June series was much lower than average recent rollovers. The way the indices have reacted from the top does not augur well for the Bulls. If the Sensex happens to close below the level of 19499 and Nifty below 5912, then a bearish topping out pattern will have got completed which will take the market further down. Currently only the short term trend is bearish while the medium and long term trend still remains positive.

TECHNICALLY SPEAKING. 

Sensex opened the week at 19750, made a high of 20254, low of 19678 and closed the week at 19760. Thus it registered a small weekly gain of 56 points. At the same time the Nifty opened the week at 5989, made a high of 6133, low of 5975 and closed the week at 5985. Thus the Nifty went up by just 2 points on a weekly basis.

Friday saw a big black body candle being formed on both the indices. The Bearish candle wiped away all the bullishness of the entire week. On the weekly charts both the indices have formed a Doji which is inside the previous days black candle body almost like a Bullish Harami Cross. But a Bullish Harami Cross occurs at the bottom of the trend and that is not the case here. Also the Cross is right at the bottom of the previous weeks candle body. Hence one cannot classify the weekly pattern as Bullish Harami Cross. In fact had it been a black body candle, we could have classified it as a continuation of Bearish Engulfing. Hence a lot will now depend on the next week’s formation.

This week again both the indices closed below the short term average of 20dma (Sensex – 20013 and Nifty – 6078). However, the market continues to remain above the medium term average of 50dma (Sensex – 19352 and Nifty – 5863) and even the long term average of 200dma (Sensex – 19041 and Nifty – 5776). Thus the trend in the short term timeframe has turned bearish, whereas the trend in the medium term and the long term timeframe remains upwards.

Currently the market is in a correction mode and is correcting the rally from Sensex 18144 to 20443 and Nifty from 5477 to 6229. The respective Correction levels are Sensex 19565-19293-19022 and Nifty 5942-5853-5764. The correction will resume if the Sensex goes below 19568 and Nifty below 5936.

Last week the market fall halted temporarily after touching the 38.2% Retracement level. But strong support will be seen at the Support zone between Nifty 5853-5843 which is due to the confluence of 50% Retracement level (5853), and Bullish Rising Gap (5853-5844). Thus it is a critical support level, if breached then the medium term trend will turn bearish.

If the Sensex starts trading below 19499 and Nifty below 5912, then a strong bearish topping pattern will have got completed and that is definitely a cause of concern for the Bulls.

The Bullish Rising Gap between Sensex 18284-18062 and Nifty 5526-5447 was tested many times in the last month and the gap has proved to be a strong support for the market. In fact this gap has consistently provided support to the market. This gap holds more significance because a breach of this gap will signal the end of the current rally.

As soon as the market started trading above the levels of Sensex 19754 and Nifty 5971, two things happened. First the Bearish Head and Shoulders pattern got negated. Second the formation which got completed is a cross between a Saucer formation and a V-shape formation. The target for this formation is at Sensex 21364 and Nifty 6465. In the process of achieving the above mentioned targets, both Sensex and Nifty will test the all time highs of Sensex 21206 and Nifty 6357.

MACD continues in Sell mode despite being in positive zone. ROC too is negative and continues with its Sell signal. RSI (47) has given a fresh Sell signal by moving below the equilibrium line. Stochastic Oscillator too has given a fresh Sell signal as %K (46) has gone below %D. MFI has just moved above the centerline giving a Buy signal. ADX has further reduced to 26, suggesting the uptrend has lost majority of its strength. Interestingly the Directional Indicators have converged and are having the same value which is suggestive of reduction in strength of uptrend. OBV is still in Buy mode. Thus, majority of the Oscillators points towards bearishness in the short term.

The Nifty O.I. PCR is steady at 1.14. For the June month series, highest Open interest build up is seen at 5900 Put and 6200 Call. This suggests that the market expects a trading range for the Nifty with support coming in at 5900 and resistance around 6200 levels. Lot of Call writing was seen at the strike of 6000 on Friday, which suggests an immediate resistance at that level.

For the week ahead, Sensex will find Support at 19434-19082-18760 and will find Resistance at 20036-20254-20505.

For the week ahead, Nifty will find Support at 5878-5757-5663 and will find Resistance at 6079-6181-6260.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5663

5757

5878

5985

6079

6181

6260

Sensex

18760

19082

19434

19760

20036

20254

20505

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell TataStL

292

297

282

272

Sell OBC

244

250

235

225

Sell Raymond

274

279

265

256

Sell REC

221

226

212

203

Sell AdaniEnt

212

217

204

196

WATCH OUT FOR:

Adani Entp

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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