Archives : SUPPORT ZONE HOLDS - 20/12/2013.

SUPPORT ZONE HOLDS – 20/12/2013.

CONSOLIDATING NEAR THE TOP.

Despite being an event heavy week, market managed to hold the support zone (Sensex 20668 -20636 and Nifty 6142 – 6140) as mentioned in the previous weeks article. Nifty bounced back from low of 6129 during the week, validating the support zone mentioned above. So the market continues to consolidate. It needs to be remembered that a consolidation near the top will augur well for the market in the long term and it will be over only when Nifty closes above 6306.

 

 


SUPPORT ZONE HOLDS – 20/12/2013.

CONSOLIDATING NEAR THE TOP.

Despite being an event heavy week, market managed to hold the support zone (Sensex 20668 -20636 and Nifty 6142 – 6140) as mentioned in the previous weeks article. Nifty bounced back from low of 6129 during the week, validating the support zone mentioned above. So the market continues to consolidate. It needs to be remembered that a consolidation near the top will augur well for the market in the long term and it will be over only when Nifty closes above 6306.

TECHNICALLY SPEAKING.

Sensex opened the week at 20714, made a high of 21117, low of 20568 and closed the week at 21079. Thus it registered a weekly gain of 364 points. At the same time the Nifty opened the week at 6168, made a high of 6284, low of 6129 and closed the week at 6274. Thus the Nifty closed the week with a gain of 106 points.

On the daily charts, both Sensex and Nifty completed a Bullish Engulfing pattern on Wednesday. On Friday, both the indices made a big white body candle, suggesting that the bulls are active. On the weekly charts, both the indices have formed a small white body candle. If we consider last two weeks candles, then it is almost like a Bullish Harami, but one cannot classify it as one because Bullish Harami occurs at the bottom which is not the case here. Hence daily candlestick study suggests a bullish bias whereas the weekly pattern is not very supportive of that.

As mentioned in the previous weeks article, Market bounced back from the Support zone between Sensex 20668 – 20636 and Nifty 6142 – 6140. This support zone is due to the confluence formed by 61.8% Retracement (Sensex – 20651 and Nifty 6141) of the immediate rise and 38.2% Retracement (Sensex – 20636 and Nifty – 6142) of the intermediate rally, besides the presence of the medium term moving average support of 50dma.

If the Nifty falls below 6129, then the correction will intensify and we will need to look at intermediate rise from 19264 to 21483 for the Sensex and 5700 to 6415 for the Nifty. Accordingly, the Correction levels will be Sensex 20636-20374-20112 and Nifty 6142-6058-5973.

From a longer term perspective, Market has a strong support zone between Sensex 19444-19264 and Nifty 5738-5688. This is a confluence zone formed by the presence of Bullish Rising Gap between Sensex 19444-19293 and Nifty 5738-5688, intermediate low of Sensex 19264 and Nifty 5700 and the 50% Retracement level which is at Sensex 19385 and Nifty 5730. Thus this is a strong Support Zone and a breach of this support zone will end the current uptrend.

This week, both Sensex and Nifty once again conquered and closed above the short term average of 20dma (Sensex – 20825 and Nifty – 6197) and the medium term average of 50dma (Sensex – 20747 and Nifty – 6166). Indices continue to remain above the long term average of 200dma (Sensex – 19692 and Nifty – 5895). Thus the trend in the short term and the medium term timeframe has turned up, whereas the trend in the long term timeframe continues to remain positive.

MACD, despite being positive continues with its Sell signal. ROC turned positive and has just given a fresh buy signal on Friday. Same is the case with RSI (56) which also has given a fresh Buy signal, suggesting bullish momentum. MFI (37) continues to remain below the equilibrium line, suggesting money flowing out. Stochastic Oscillator has given a fresh Buy signal as %K (33) has gone above %D. ADX has fallen further to 11, suggesting that the market is in consolidation mode. The Directional Indicators continue in Buy mode as +DI is above –DI. OBV continues in Sell mode forming lower top lower bottom formation. Thus Oscillators are giving mixed signals for the immediate term.

The Nifty O.I. PCR has improved to 1.24. For the current series, highest Open interest build up has shifted to 6200 Put and 6300 Call. This suggests that the market expects a narrow trading range with support coming in at 6200 levels and resistance around 6300 levels.

The Trendline Resistance for the Sensex is at 21549. The Trendline Support for the Sensex is at 20669.

The Trendline Resistance for the Nifty is at 6443. The Trendline Support for the Nifty is at 6138.

For the week ahead, Sensex will find Support at 20739-20443-20137 and will find Resistance at 21321-21577-21823.

For the week ahead, Nifty will find Support at 6181-6079-5972 and will find Resistance at 6342-6415-6492.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5972

6079

6181

6274

6342

6415

6492

Sensex

20137

20443

20739

21079

21321

21577

21823

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy TCS

2120

2084

2177

2236

Buy McDowell

2670

2628

2739

2810

Buy Maruti

1809

1777

1857

1906

Buy STFC

659

647

677

696

Buy Hexaware

126

124

130

135

WATCH OUT FOR:

McDowell Diamond

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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