EVERY DIP - A BUYING OPPORTUNITY - 07/04/2017.

A PULL-BACK & NOT A CORRECTION.

The fall witnessed on Friday late afternoon has raised the expectation of a long awaited Correction. But the minor fall on Friday can be described as a dip and not the start of a Correction. A lot of market participants are experiencing the ‘left-out’ feeling as the market has gone from strength to strength since last three months without giving any meaningful Correction. The current fall is likely to find strong Support in the form of Bullish Weekly Gap between 9060-8977 for the Nifty. Thus only a break of this support will trigger off the long awaited Correction; till then every dip will be a Buying Opportunity.

EVERY DIP - A BUYING OPPORTUNITY - 07/04/2017.

 A PULL-BACK & NOT A CORRECTION.

The fall witnessed on Friday late afternoon has raised the expectation of a long awaited Correction. But the minor fall on Friday can be described as a dip and not the start of a Correction. A lot of market participants are experiencing the ‘left-out’ feeling as the market has gone from strength to strength since last three months without giving any meaningful Correction. The current fall is likely to find strong Support in the form of Bullish Weekly Gap between 9060-8977 for the Nifty. Thus only a break of this support will trigger off the long awaited Correction; till then every dip will be a Buying Opportunity.

TECHNICALLY SPEAKING.

Sensex opened the week at 29737, made a high of 30007, low of 29668 and closed the week at 29706. Thus it closed the week with a gain of 86 points. At the same time the Nifty opened the week at 9220, made a high of 9273, low of 9188 and closed the week at 9198. Thus the Nifty closed the week with a gain of 25 points.

On the daily charts, both the indices have formed a small black body candle with an upper shadow. On the weekly charts, both Sensex and Nifty have formed a small black body candle with a longer upper shadow. It falls short to being classified as a Shooting Star because of presence of lower shadow and upper shadow not being long enough. Thus both daily and weekly formations are suggesting a slight bearish bias in the near term.

In case the downward move continues, then both the indices are likely to find strong support at the powerful weekly gap i.e. between Sensex 29356-29098 and Nifty 9060-8977. This gap will not only act as strong support, but is also a Measuring Gap. The target as per Gap theory falls at Sensex 32737 and Nifty 10144.

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 has generated a fresh Sell signal. Price ROC continues to remain positive and in Buy mode. RSI (60) suggests Bullish momentum. Stochastic Oscillator %K (87) continues in Sell mode. ADX is at 38 which suggest that the Uptrend is very strong. Directional Indicators continue in Buy mode as +DI remains above –DI. MFI (59) 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 January. Thus Oscillators are painting a mixed picture.

This week, both the indices continued to remain above the short term average of 20dma (Sensex – 29492 and Nifty – 9121), medium term average of 50dma (Sensex – 28852 and Nifty – 8927) and even the long term average of 200dma (Sensex – 27777 and Nifty – 8568). Thus the trend in the short term, medium term and even the long term timeframe continues to remain upwards.

Options data for April series indicate highest Call Open Interest build-up has shifted higher at the strike of 9500 and highest Put build-up remains at 9000. Thus Options data suggests a trading range with resistance coming in at 9500 and support at 9000.

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