Archives : PAUSE IN THE UPWARD RALLY - 24/03/2017.

PAUSE IN THE UPWARD RALLY - 24/03/2017.

 

 WEEKLY GAP AS SUPPORT.

After giving a bullish breakout two weeks back, the indices are on its way to achieve higher targets, but the speed at which the market has rallied has made it necessary for the market to cool down and pause for a bit before resuming the upward rally. It is quite normal for the market to undergo a consolidation, which explains the current scenario. Last week, the indices took support at the Bullish Weekly Gap (Sensex 29356-29098 and Nifty 9060-8977) before staging a bounce-back. Hence this Weekly Gap holds the key to the Trend of the market in the near term.

 


PAUSE IN THE UPWARD RALLY - 24/03/2017.

 

WEEKLY GAP AS SUPPORT.

 

After giving a bullish breakout two weeks back, the indices are on its way to achieve higher targets, but the speed at which the market has rallied has made it necessary for the market to cool down and pause for a bit before resuming the upward rally. It is quite normal for the market to undergo a consolidation, which explains the current scenario. Last week, the indices took support at the Bullish Weekly Gap (Sensex 29356-29098 and Nifty 9060-8977) before staging a bounce-back. Hence this Weekly Gap holds the key to the Trend of the market in the near term.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 29653, made a high of 29699, low of 29137 and closed the week at 29421. Thus it closed the week with a loss of 227 points. At the same time the Nifty opened the week at 9166, made a high of 9167, low of 9019 and closed the week at 9108. Thus the Nifty closed the week with a loss of 52 points.

 

On the daily charts, Nifty has formed a Doji, whereas Sensex has formed a small white body candle with small upper shadow. On the weekly charts, both the indices have formed a small black body Paper Umbrella, which cannot be classified as a Hanging Man. Thus, both daily as well as weekly candlestick formations are suggesting more of a neutral bias in the near term.

 

This week, both the indices took support at the powerful weekly gap i.e. between Sensex 29356-29098 and Nifty 9060-8977. The market bounced back from this Gap. This gap will not only act as strong support in the days to come, but will also act as a Measuring Gap. The target as per Gap theory falls at Sensex 32737 and Nifty 10144.

 

On the daily charts, both Sensex and Nifty have formed a Pennant formation. The target as per the pattern falls at Sensex 30399 and Nifty 9252.

 

Since the indices have managed a close above Sensex 29077 and Nifty 8968, both the indices have completed a Saucer formation on the daily charts. The target as per this pattern falls at Sensex 31153-32437 and Nifty 9630-10043. On the weekly formation, both the indices have completed a Cup and Handle formation and the targets are Sensex 34677-37554 and Nifty 10536-11413.

 

If one considers the Cup and Handle formation of 7 years from 2007 to 2014, the target for that pattern falls at Sensex 34715 and Nifty 10462. The Golden Ratio target of the current pattern weekly pattern of 2 years is at Sensex 34677 and Nifty 10536. Thus in the medium term one can expect a test of the above targets i.e. Sensex 34677-34715 and Nifty 10462-10536.

 

MACD despite being in positive zone continues in Sell mode. Price ROC continues to remain positive and in Buy mode. RSI (63) suggests Bullish momentum. Stochastic Oscillator %K (58) continues in Sell mode. ADX is at 42 which suggest that the Uptrend is very strong. Directional Indicators continue in Buy mode as +DI remains above –DI. MFI (57) suggests Positive Money Flow. OBV continues in Buy mode and continues to make higher top, higher bottom formation. Bollinger Band continues in Buy mode since past two months. Thus majority of the Oscillators are suggesting a continuation of bullishness in the near term.

 

This week, both the indices continued to remain above the short term average of 20dma (Sensex – 29146 and Nifty – 9005), medium term average of 50dma (Sensex – 28410 and Nifty – 8787) and even the long term average of 200dma (Sensex – 27664 and Nifty – 8524). Thus the trend in the short term, medium term and even the long term timeframe continues to remain upwards.

 

Options data for March series indicate highest Call Open Interest build-up at the strike of 9200 and highest Put build-up has shifted higher at 8800. Thus Options data suggests a trading range with resistance coming in at 9200 and support at 8800.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8804

8903

9019

9108

9218

9339

9444

Sensex

28410

28721

29076

29421

29824

30252

30662

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy MRF

59308

57984

61339

63444

Buy Cummins

924

901

959

995

Buy M&M Fin

320

312

333

347

Buy CGPower

77

75

81

86

Buy AndhraBank

56

54

60

64

 

WATCH OUT FOR:

 

 

Cummins

 

KSCL"

 

 

 

 

 

 

 

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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