NIFTY 8322-8379 : STRONG R-ZONE- 23/10/2015.

NEXT WEEK CRITICAL FOR THE MARKET.

As expected the market went just up to the Resistance zone of 8322-8379 for the Nifty and stopped. This Resistance zone holds great significance as it is not just a Resistance zone but it also defines the long term trend of the market. The neutral candlestick formations of last week have done little to instil confidence in the bulls. Thus coming week will be a critical test for the market not only for the bulls but for the market itself.

TECHNICALLY SPEAKING.

Sensex opened the week at 27305, made a high of 27555, low of 27190 and closed the week at 27470. Thus it closed the week with a gain of 256 points. At the same time the Nifty opened the week at 8262, made a high of 8328, low of 8217 and closed the week at 8295. Thus the Nifty closed the week with a gain of 57 points.

On the daily charts both Sensex and Nifty have formed a Doji formation, which is second consecutive neutral formation over past two days. On the weekly charts, both the indices have formed a small white body Star formation. Thus the daily as well as weekly candlestick pattern is suggesting a pause in the upward movement.

Both the indices are undergoing a Retracement of the entire fall from 30024 to 24833 for the Sensex and 9119 to 7539 for the Nifty. The relevant Retracement levels are placed at Sensex 26816-27429-28041 and 8143-8329-8515 for the Nifty.

The indices tested the higher Bearish Gap between 27442 – 27564 for the Sensex and 8322 – 8359 for the Nifty, but could not surpass it. Accompanying this gap is the 50% Retracement (Sensex - 27429 and Nifty - 8329), the critical 200dma (Sensex – 27670 and Nifty - 8379) and strong Trendline Resistance (Sensex 27621 and Nifty 8349) which is just above the gap. Thus all the above resistances combine to form a strong Resistance zone between Sensex 27429-27670 and Nifty 8322-8379.

Despite the current pull-back, both the indices remain on track to achieve the targets for Head and Shoulders pattern (Sensex 24486 and Nifty 7425). Besides a higher degree Head and Shoulders got completed recently, the target for that falls at Sensex 22552 and Nifty 6741.

MACD and Price ROC are both positive and continue in Buy mode. RSI (63) continues to suggest bullish momentum. Stochastic Oscillator (90) is in overbought zone and has also signalled a Sell. ADX has dropped to 19, suggesting that the current downtrend has lost all of its strength. However the Directional Indicators continue in Buy mode. MFI (56) continues to suggest positive money flow. OBV as well as Bollinger Band continue with their Buy signals. Thus Oscillators are suggesting a continuation of bullish bias in the near term.

This week, both the indices managed to remain and close above the short term average of 20dma (Sensex – 26716 and Nifty – 8095) and also the medium term average of 50dma (Sensex – 26503 and Nifty – 8042). However, both Sensex and Nifty continue to remain below the long term average of 200dma (Sensex – 27670 and Nifty – 8379). Thus the trend in the short term and medium term is upwards whereas that in the long term timeframe continues to remain bearish.

Options data for October series indicates highest Put Open Interest build-up has shifted at the strike of 8300 and highest Call build-up at the strike of 8200. Thus Option data suggests a trading range with resistance coming in at 8300 and support at 8200.

INDEX LEVELS:

LAST WEEKS RECOMMENDATIONS:

THIS WEEKS RECOMMENDATIONS:

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