Archives : Bullish Breakaway Gap Supports The Market - 05/07/2013.

BULLISH BREAKAWAY GAP SUPPORTS THE MARKET – 05/07/2013.

SHORT TERM TREND TURNS BULLISH.

 

Just like the previous week, the market movement for the week can be classified as extremely choppy and volatile. The market took support just above the Bullish Breakaway Gap made in the last week i.e. between Sensex 19093-18925 and Nifty 5749-5699. Sensex bounced from a low of 19147 and Nifty from 5760. While the market continues to retrace the fall from Sensex 20443 to 18467 and Nifty 6229 to 5566, the intermediate minor bottom formed this week, coupled with the Bullish Breakaway Gap will provide strong support to the market in the short term. The long term as well as the short term trend has turned positive while the medium term trend still remains down.

 

 

 

 

 

BULLISH BREAKAWAY GAP SUPPORTS THE MARKET – 05/07/2013.

SHORT TERM TREND TURNS BULLISH.

Just like the previous week, the market movement for the week can be classified as extremely choppy and volatile. The market took support just above the Bullish Breakaway Gap made in the last week i.e. between Sensex 19093-18925 and Nifty 5749-5699. Sensex bounced from a low of 19147 and Nifty from 5760. While the market continues to retrace the fall from Sensex 20443 to 18467 and Nifty 6229 to 5566, the intermediate minor bottom formed this week, coupled with the Bullish Breakaway Gap will provide strong support to the market in the short term. The long term as well as the short term trend has turned positive while the medium term trend still remains down.

TECHNICALLY SPEAKING. 

Sensex opened the week at 19352, made a high of 19640, low of 19147 and closed the week at 19495. Thus it registered a weekly gain of 100 points. At the same time the Nifty opened the week at 5834, made a high of 5904, low of 5760 and closed the week at 5867. Thus the Nifty went up by 25 points on a weekly basis.

Both the indices have formed a small black body on the daily charts but that is after a bullish gap up. Hence it indicates a continuation of the ongoing bullishness.  Both Sensex and Nifty have formed a small white body candle on the weekly charts which comes on the back of the Bullish Engulfing pattern witnessed last week. A bigger white body would have confirmed the bullish pattern but the small white body can be termed a continuation of the bullishness.

Two weeks back both the indices left behind a Bullish Rising gap between Sensex 19093-18925 and Nifty 5749-5699. This gap acted as a support this week as the Sensex and Nifty bounced from just above this gap; Sensex bounced from 19147 and Nifty from 5760. This gap marks the beginning of a bull rally and hence it can be termed as a Bullish Breakaway gap. Also this gap completed a Bullish Island Reversal pattern on the daily charts. This is the second time a Bullish Island formation has occurred in the last one month. One can buy with a stop loss of Sensex 18467 and Nifty 5566.

Both the indices have taken support at just above the Bullish Breakaway gap and hence we continue to correct the fall from Sensex 20447 to 18467 and Nifty 6229 to 5566. The Retracement levels for that is 19222-19455-19688 for the Sensex and 5819-5897-5976 for the Nifty.

This week both the indices have managed to stay and close above the short term average of 20dma (Sensex – 19101 and Nifty – 5764) and also above the long term average of 200dma (Sensex – 19232 and Nifty – 5831). However, both the indices continue to remain below the medium term average of 50dma (Sensex – 19557 and Nifty – 5923). Thus the trend in the long term and short term timeframe continues to be up, whereas the trend in the medium term timeframe continues to remain down.

Two weeks back the markets, once again managed to bounce from above the Bullish Rising Gap between Sensex 18284-18062 and Nifty 5526-5447. This gap was tested many times in the last couple of months and 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 long term rally.

MACD and ROC both continue with their Buy signals; MACD being in the negative whereas the ROC continues in the positive zone. RSI (54) too continues to remain above the equilibrium line, indicating bullish momentum. Stochastic Oscillator continues in Sell mode as %K (78) is below %D. MFI (49) has increased and has become steady just below the centerline and hence continues with its Sell signal. The Sell signal for the Bollinger band given four weeks back stands negated as the prices have closed above the mean of 20dma. ADX has fallen further to 20 suggesting that the current trend has lost all of its strength. The Directional Indicators continue with their Buy signal as +DI remains above –DI. OBV too has started moving higher forming higher top higher bottom formation. Thus majority of the Oscillators are suggesting continuation of short term bullishness.

The Nifty O.I. PCR has improved to 1.39. For the current month series, highest Open interest build up is seen at 5600 Put and 6000 Call. This suggests that the market expects a trading range with support coming in at 5600 levels and resistance around 6000 levels. Lot of Put writing was seen at the strike of 5800 on Friday, which suggests immediate support around that level.

The Trendline Resistance for the Sensex is at 19610. The Trendline Support for the Sensex is at 18538.

The Trendline Resistance for the Nifty is at 5926. Trendline Support for the Nifty falls at 5584.

For the week ahead, Sensex will find Support at 19186-18873-18590 and will find Resistance at 19754-20036-20286.

For the week ahead, Nifty will find Support at 5760-5663-5566 and will find Resistance at 5971-6069-6181.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5566

5663

5760

5867

5971

6069

6181

Sensex

18590

18873

19186

19495

19754

20036

20286

LAST WEEKS RECOMMENDATIONS:

All the major Recommendations did well to reach their targets with the exception of Apollo Hospital which missed its target. However the Star Performers of the week were Aurobindo Pharma and Reliance Infra which went by about 6% and 7% respectively!!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

DrReddy

2218

2269

2288

125

Rs. 8,750

Buy Ambuja

186

191

192

2000

Rs.12,000

ApoHos

1053

1097

1054

250

Rs. 250

Buy AuroPh

180

190

191

2000

Rs.22,000

ReLInfra

349

367

373

1000

Rs.24,000

Total

Rs.67,000

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy GodrejInd

318

313

327

336

Buy CoLPaL

1387

1369

1415

1445

Buy JubFood

1130

1112

1156

1184

Buy AuroPh

188

184

195

202

Buy Thermax

616

604

635

655

WATCH OUT FOR:

Godrej Ind

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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