Archives : SHORT TERM SUPPORT @ 9250-9225 - 05/05/2017.

SHORT TERM SUPPORT @ 9250-9225 - 05/05/2017.

 

TREND STILL POSITIVE.

 

A big bearish candle formation on Friday has the Bulls worried. But the Bulls need to keep in mind that the Trend across short and medium term timeframe still remains upward. Also a strong Support exists at the Bullish Gap between 9250-9225. A break of this Support will turn the short term trend down and then the market will enter into a Correction mode. Current Upward Rally will resume only when the indices close above the failure point i.e. top of bearish candle of Friday (Sensex 30176 and Nifty 9377).

 


 


SHORT TERM SUPPORT @ 9250-9225 - 05/05/2017.

 

TREND STILL POSITIVE.

 

A big bearish candle formation on Friday has the Bulls worried. But the Bulls need to keep in mind that the Trend across short and medium term timeframe still remains upward. Also a strong Support exists at the Bullish Gap between 9250-9225. A break of this Support will turn the short term trend down and then the market will enter into a Correction mode. Current Upward Rally will resume only when the indices close above the failure point i.e. top of bearish candle of Friday (Sensex 30176 and Nifty 9377).

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 30021, made a high of 30176, low of 29804 and closed the week at 29858. Thus it closed the week with a loss of 60 points. At the same time the Nifty opened the week at 9339, made a high of 9377, low of 9269 and closed the week at 9285. Thus the Nifty closed the week with a loss of 19 points.

 

On the daily charts, Sensex has formed a Bearish Engulfing pattern whereas Nifty has formed a Bearish Belt Hold pattern. Both are bearish reversal patterns. On the weekly chart, the indications are not bearish as both the indices have formed a small black body candle. Thus the daily candlestick pattern study indicates a bearish bias whereas weekly study indicates a positive bias.

 

Last week, both the indices have left behind a bullish gap while moving higher between Sensex 29780-29681 and Nifty 9250-9225. This gap will act as Support in the near term. The formation of bearish candle on Friday indicates that the above mentioned Support will be tested in this week. A break of this Support will turn the short term trend to bearish.

 

Two weeks back, the market went down to test the strong support in the form of the weekly gap i.e. between Sensex 29356-29098 and Nifty 9060-8977. This gap provided support and the indices recovered from that level. This Gap is now very significant as a break of this Gap will turn the medium term trend to bearish. Besides acting as a support, this gap also acts as a Measuring Gap. The target as per Gap theory falls at Sensex 32737 and Nifty 10144.

 

When the indices closed above Sensex 29077 and Nifty 8968, both Sensex and Nifty 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 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 and Price ROC are both positive and continue with its Buy signals. RSI (57) suggests Bullish momentum. Stochastic Oscillator %K (82) is in Sell mode. ADX is at 35 which suggest that the Uptrend is still strong. Directional Indicators continue in Buy mode as +DI remains above –DI. MFI (63) suggests Positive Money Flow. OBV continues to make lower top lower bottom formation. Buy signal continues in Bollinger Band. Thus majority of Oscillators are still suggesting a bullish bias.

 

This week, both the indices maintained above the short term average of 20dma (Sensex – 29722 and Nifty – 9231), the medium term average of 50dma (Sensex – 29419 and Nifty – 9111) and even the long term average of 200dma (Sensex – 28020 and Nifty – 8654). Thus the trend in the short term has remained bullish whereas the trend in the medium term and the long term timeframe continues to remain upwards.

 

Options data for May series indicate highest Call Open Interest has shifted lower at the strike of 9400 and highest Put build-up is now at 9200. Thus Options data suggests a trading range with resistance coming in at 9400 and support at 9200.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8992

9087

9191

9285

9377

9465

9553

Sensex

28815

29241

29539

29858

30184

30556

30889

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Bosch

23453

23050

24062

24738

Buy CEAT

1660

1620

1723

1789

Buy D-Mart

808

788

839

873

Buy Escorts

592

577

615

639

Buy Cadila

466

456

481

497

 

 

WATCH OUT FOR:

 

 

Bosch

 

HUL
 
 

 

 

 

 

 

 

 

 

 

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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