Archives : RANGE TRADING CONTINUES - 12/08/2016.

RANGE TRADING CONTINUES - 12/08/2016.

VOLATILITY ON THE RISE.

Market has been trading in a small range of 250 points on the Nifty (8728 - 8476) for more than five weeks now. Interestingly, the market has been able to digest all the news of past month but the range breakout seemed elusive. As per the principle of Volatility, one can expect the Range breakout soon. Despite trading in a range, the past week was very volatile to say the least. Even though the Trend remains positive; Bearish candlestick formation on the weekly chart does not augur well for the market.


RANGE TRADING CONTINUES - 12/08/2016.

VOLATILITY ON THE RISE.

Market has been trading in a small range of 250 points on the Nifty (8728 - 8476) for more than five weeks now. Interestingly, the market has been able to digest all the news of past month but the range breakout seemed elusive. As per the principle of Volatility, one can expect the Range breakout soon. Despite trading in a range, the past week was very volatile to say the least. Even though the Trend remains positive; Bearish candlestick formation on the weekly chart does not augur well for the market.

TECHNICALLY SPEAKING.

Sensex opened the week at 28181, made a high of 28289, low of 27697 and closed the week at 28152. Thus it closed the week with a minor gain of 74 points. At the same time the Nifty opened the week at 8712, made a high of 8728, low of 8540 and closed the week at 8672. Thus the Nifty closed the week with a minor loss of 11 points.

On the daily charts, both Sensex and Nifty had formed an Opening White body Marubuzo which combined with last three days forms a Morning Star. But this pattern cannot be given high significance as it has occurred in the midst of consolidation in a sideways trend. On the weekly chart, Nifty has formed a Hanging Man whereas Sensex has formed a Bearish Doji. Both Hanging Man and Bearish Doji are bearish reversal pattern but requiring confirmation. Thus next weeks Bearish candle will confirm the reversal. Thus weekly candlestick study indicates a Bearish bias in the near term.

Both the indices continue to trade in a range of Sensex 28289-27627 and Nifty 8728 – 8476, for more than a month now. On the lower side, the trading range is supported by the Bullish Gap between Sensex 27667-27647 and Nifty 8479-8475. This Gap acted as a strong support for four times and hence it becomes a very critical Support in the near term. If the range is broken on the upper side, expect the Flag pattern target immediately and then towards the life time highs.

On a higher timeframe a very strong Support exists in the form of Bullish Weekly Gap between Sensex 27358-27294 and Nifty 8407-8398. This above Weekly Bullish Gap is also a Measuring Gap and the target for which falls at Sensex – 28741 and Nifty – 8833.

As the Sensex and Nifty continue to remain above their critical 61.8% Retracement level (Sensex – 27148 and Nifty 8243) of the entire fall from Sensex 30024 to 22494 and Nifty 9119 to 6825. This marks the end of Correction phase and is now signalling a move towards testing life highs of Sensex 30024 and Nifty 9119.

Both the indices completed a Bullish Flag pattern and the target for the pattern falls at Sensex – 28859 and Nifty – 8869. Both the targets will be achieved as long as Sensex remains above 27034 and Nifty above 8287.

MACD continues in Sell mode despite being in positive zone. Price ROC has just turned positive and has signalled a Buy. RSI (59) suggests bullish momentum. Stochastic Oscillator %K (47) is below %D and hence continues in Sell mode. ADX has dropped to 25 which suggest that Uptrend is still intact. Directional Indicators continue in Buy mode as +DI is above –DI. MFI (45) suggests Negative Money Flow. Thus majority of Oscillators are suggesting a slight bearish bias in the near term.

This week, both the indices tested the short term average of 20dma (Sensex – 27942 and Nifty – 8603) but managed to hold and close above it. Both the indices continue to remain well above the medium term average of 50dma (Sensex – 27360 and Nifty – 8403) and even the long term average of 200dma (Sensex – 25784 and Nifty – 7867). Thus the trend in the short term, medium term and even the long term timeframe continues to remain Bullish.

Options data for August series indicate highest Call Open Interest build-up at the strike of 9000 and highest Put build-up at 8500. Thus Options data suggests a wide trading range with resistance coming in at 9000 and support at 8500.

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

BajAuto

2862

2955

2918

250

Rs.14,000

Buy ACC

1721

1783

1736

400

Rs. 6,000

TorntPh

1519

1569

1535

400

Rs. 6,400

AxisBk

567

588

591

1200

Rs.28,800

Hindalco

143

149

152

7000

Rs.63,000

Total

Rs.1,18,200.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8398

8476

8540

8672

8774

8849

8985

Sensex

27034

27385

27697

28152

28455

28822

29183

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy YesBnk

1290

1265

1328

1368

Buy CESC

639

624

662

686

Buy LiCHsg

554

541

574

595

Buy SBI

243

236

254

266

Buy AdaniPort

258

251

269

281

WATCH OUT FOR:

LIC Hsg

TCS InvH&S

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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