KNOCKING ON THE DOORS OF 200DMA - 13/04/2016.

SMALL WEEK; BIG GAINS.

Despite being a small week of just three trading sessions, the market registered big gains and in the process managed a close above the critical resistance level of the previous intermittent top of 7777. Interestingly, the bullish momentum has taken the market higher and it is now at the brink of the long term Resistance, which consists of the Trendline which has been acting as strong Resistance for more than a year and the critical long term average of 200dma. Next week will be interesting as the market not only grapples with this critical Resistance but also digests the results of Infosys which will be declared on Friday.

KNOCKING ON THE DOORS OF 200DMA - 13/04/2016.

SMALL WEEK; BIG GAINS.

Despite being a small week of just three trading sessions, the market registered big gains and in the process managed a close above the critical resistance level of the previous intermittent top of 7777. Interestingly, the bullish momentum has taken the market higher and it is now at the brink of the long term Resistance, which consists of the Trendline which has been acting as strong Resistance for more than a year and the critical long term average of 200dma. Next week will be interesting as the market not only grapples with this critical Resistance but also digests the results of Infosys which will be declared on Friday.

TECHNICALLY SPEAKING.

Sensex opened the week at 24789, made a high of 25671, low of 24523 and closed the week at 25626. Thus it closed the week with a gain of 953 points. At the same time the Nifty opened the week at 7577, made a high of 7864, low of 7516 and closed the week at 7850. Thus the Nifty closed the week with a gain of 295 points.

On the daily charts, both the indices opened with a big gap up and continued its run to register a big Opening White body Marubuzo. On the weekly charts, both Sensex and Nifty have formed a big Closing White Body Marubuzo. Thus daily as well as weekly candlestick pattern study indicates a bullish bias in the near term.

After a gap up opening on Wednesday, market proceeded from strength to strength and in the process overcame the previous intermittent top of Sensex 25479 and Nifty 7777. As a result, we now look at the Retracement of the entire fall from Sensex 30024 to 22494 and Nifty from 9119 to 6825. The relevant Retracement levels are placed at Sensex 25371-26259-27148 and Nifty 7702-7972-8243.

The indices went from strength to strength and are now at the critical Resistance zone of Sensex 25887-25941 and Nifty 7850-7872; which is due to the confluence of long term average of 200dma (Sensex – 25941 and Nifty 7872) and the long term Trendline (Sensex – 25887 and Nifty – 7850) which has been acting as strong Resistance for more than a year now.

While moving lower, both the indices have left behind couple of Bullish Rising Gaps and the first Gap is at Sensex 24383-24280 and Nifty 7406-7380. This Gap will act as strong Support Zone as it coincides with the medium term average of 50dma (Sensex – 24386 and Nifty – 7424).

MACD and Price ROC are both positive and have signalled a fresh Buy. RSI (65) indicates bullish momentum. Stochastic Oscillator %K (78) remains above %D; hence continues in Buy mode. ADX has dropped further to below 20 and is at 14, suggesting that the current Trend has no strength. Directional Indicators are in Buy mode as +DI has gone above –DI. MFI (51) still suggests Positive Money Flow. OBV continues to make higher Top, higher Bottom formation. Thus majority of Momentum Oscillators are suggesting a positive bias in the near term.

This week, both the indices overcame the short term average of 20dma (Sensex – 25048 and Nifty – 7645) and closed above it. Both Sensex and Nifty continues to remain above the medium term average of 50dma (Sensex – 24386 and Nifty – 7424) but are just below the long term average of 200dma (Sensex – 25941 and Nifty – 7872). Thus the trend in the short term timeframe has turned bullish; whereas the trend in the medium term timeframe continues to remain up but the trend in the long term timeframe continues to remain bearish.

Options data for April series indicate highest Call Open Interest build-up at 8000 and highest Put build-up at 7500. Thus Option data suggests a trading range with resistance coming in at 8000 and support at 7500.

INDEX LEVELS:

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