Archives : TRENDLINE SUPPORT TO THE RESCUE - 09/01/2015.

TRENDLINE SUPPORT TO THE RESCUE - 09/01/2015. 

NEED TO STAY ABOVE NIFTY - 8064.

Just last week when the Nifty went above the critical level of 8372, it looked as if the bulls were back in command. But that was short lived as Volatility struck and the market backed off. This time again the market took support at the critical demand Trendline before bouncing back. Now if this trendline gets breached then the market will be in for a sharp correction. Thus Nifty needs to stay above 8064 for the bulls to survive.

 

 


TRENDLINE SUPPORT TO THE RESCUE - 09/01/2015. 

NEED TO STAY ABOVE NIFTY - 8064.

Just last week when the Nifty went above the critical level of 8372, it looked as if the bulls were back in command. But that was short lived as Volatility struck and the market backed off. This time again the market took support at the critical demand Trendline before bouncing back. Now if this trendline gets breached then the market will be in for a sharp correction. Thus Nifty needs to stay above 8064 for the bulls to survive.

TECHNICALLY SPEAKING.

Sensex opened the week at 27978, made a high of 28064, low of 26776 and closed the week at 27458. Thus it closed the week with a loss of 429 points. At the same time the Nifty opened the week at 8407, made a high of 8445, low of 8065 and closed the week at 8284. Thus the Nifty closed the week with a loss of 174 points.

On the daily charts, Nifty has formed a Doji whereas the Sensex has formed a small white body candle with long lower shadows. On the weekly chart both the indices have formed a black body candle with a long lower shadow which indicates presence of support at that level. Thus daily as well as weekly candlestick study suggests mild consolidation with no clear direction.

When the market fell on Tuesday both Sensex and Nifty created a Bearish Gap between 27698-27786 and Nifty 8327-8363. Along with this gap, the 50dma and 61.8% Retracement level of the fall make for a strong confluence zone for the market. Thus Sensex 27698-27923 and Nifty 8327-8372 will act as a strong Resistance zone.

When the market went down this week, the demand Trendline which had acted as a support to the market previously, once again came to the rescue. Thus if this trendline gets taken out then it will lead to a strong medium term bearish pattern completion. Hence Trendline Support at Sensex 26705 and Nifty 8064 need to hold.

MACD has just signaled a Buy on Friday despite being in the negative zone. Also the RSI has given a fresh buy by going above the centerline suggesting bullish momentum. Price ROC remains negative and thus in Sell mode. Stochastic Oscillator continues in Sell mode as %K (37) continues to remain below %D. MFI (62) too has moved higher suggesting positive money flow. ADX has fallen to a level of 18 suggesting that the market is trendless. OBV too continues to remain sideways. Thus Oscillators are giving mixed signals and hence expect uncertainty in the next week. 

On Friday, both the indices managed to close above the short term average of 20dma (Sensex – 27324 and Nifty – 8223) but failed to conquer the medium term average of 50dma (Sensex – 27783 and Nifty – 8334). Also both the indices continue to remain well above the long term average of 200dma (Sensex – 25689 and Nifty – 7684). Thus the trend in the short term timeframe has turned bullish whereas that in the medium term timeframe continues to remain down. However the trend in the long term timeframe continues to remain up.

This week the Volatility Index struck as it increased more than 30% during the week. If India VIX closes above 19, then the first target for India VIX will be 29. Option data suggest highest Put Open Interest is at 8000 whereas the highest Call build-up has shifted to the strike of 8400. Thus Option data suggests a trading range with support coming in at 8000 and resistance around 8400.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7961

8065

8174

8315

8415

8535

8626

Sensex

26469

26776

27091

27458

27851

28294

28822

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

UltraTech

2742

2847

2775

125

Rs. 4,125

Cummins

919

961

961

500

Rs.21,000

Buy ICICI

362

375

367

1000

Rs. 5,000

IndBullHsg

480

510

512

500

Rs.16,000

Buy BOI

307

320

310

1000

Rs. 3,000

Total

Rs.49,125.

THIS WEEKS RECOMMENDATIONS: 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy TechMah

2680

2629

2758

2837

Buy Bata

1356

1327

1403

1452

Buy AuroPharm

1169

1134

1223

1278

Buy GreavesCott

154

150

161

169

Buy Edelweiss

58

56

62

66

WATCH OUT FOR:

Edelweiss

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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