Archives : MINOR ROAD-BLOCKS IN STRONG UPTREND - 19/05/2017.

MINOR ROAD-BLOCKS IN STRONG UPTREND - 19/05/2017.

 

TREND REMAINS POSITIVE.

 

The market has seen a parabolic rise in the past five months without any hint of Correction. Any decline is being used as a buying opportunity, as lot of market participants have not been able to participate in this magnificent Bull-run. Every Correction not only provides an entry point to market participants but also makes the bullish rally healthier and stronger. Past week has been a very volatile week but still the Trend continues to remain up. Strong Support exists in the form of Bullish Gap between Nifty 9250-9225; a break of which will reverse the short and medium term trend.

 



MINOR ROAD-BLOCKS IN STRONG UPTREND - 19/05/2017.

 

TREND REMAINS POSITIVE.

 

The market has seen a parabolic rise in the past five months without any hint of Correction. Any decline is being used as a buying opportunity, as lot of market participants have not been able to participate in this magnificent Bull-run. Every Correction not only provides an entry point to market participants but also makes the bullish rally healthier and stronger. Past week has been a very volatile week but still the Trend continues to remain up. Strong Support exists in the form of Bullish Gap between Nifty 9250-9225; a break of which will reverse the short and medium term trend.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 30287, made a high of 30712, low of 30273 and closed the week at 30464. Thus it closed the week with a gain of 276 points. At the same time the Nifty opened the week at 9433, made a high of 9532, low of 9390 and closed the week at 9427. Thus the Nifty closed the week with a gain of 27 points.

 

On the daily charts, both the indices have formed a small body black Spinning Top, which is a neutral formation. On the weekly chart, Sensex has formed a small white body candle with a longer upper shadow whereas Nifty has formed a Bearish Doji which requires confirmation in the form of a real body bearish candle for the next week. Thus candlestick study indicates a neutral bias.

 

Three weeks back, both the indices had left behind a bullish gap between Sensex 29780-29681 and Nifty 9250-9225. This gap was tested and it successfully acted as Support. Thus a break of this Support will turn the short and medium term trend to bearish.

 

In the previous fall, 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 their Buy signals. RSI (60) suggests Bullish momentum. Stochastic Oscillator %K (72) is below %D and hence 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 (78) suggests Positive Money Flow. OBV has once again started to make higher top, higher bottom formation. Buy signal continues in Bollinger Band. Thus majority of Oscillators are suggesting a positive bias.

 

This week, both the indices maintained above the short term average of 20dma (Sensex – 30092 and Nifty – 9355), the medium term average of 50dma (Sensex – 29711 and Nifty – 9213) and even the long term average of 200dma (Sensex – 28141 and Nifty – 8697). Thus the trend in the short term, medium term and even the long term timeframe continues to remain upwards.

 

Options data for May series indicate highest Call Open Interest is at the strike of 9500 and highest Put build-up is now shifted higher at 9300. Thus Options data suggests a trading range with resistance coming in at 9500 and support at 9300.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

9158

9250

9352

9427

9532

9630

9723

Sensex

29539

29824

30111

30464

30778

31153

31444

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Bajaj Auto

2972

2932

3033

3097

Buy Monsanto

2792

2728

2889

3091

Buy Pidilite Ind

761

744

787

815

Buy Petronet LNG

448

439

462

477

Buy Motherson Sumi

423

414

437

452

 

 

WATCH OUT FOR:

 

 

Pidilite

 

 

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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