Archives : 50DMA TESTED & HOLDS - 30/06/2017

50 DMA TESTED & HOLDS - 30/06/2017.

 

9482-9467 – SUPPORT ZONE.

 

The consolidation took a further down turn and as expected the indices tested the medium term average of 50dma (Sensex – 30634 and Nifty – 9482). Market recorded a minor recovery from those levels but the short term trend still remains down. If the Support zone of Nifty 9482-9467 is breached, then expect a test of the bullish gap between 9250-9225.

 



50 DMA TESTED & HOLDS - 30/06/2017.

 

9482-9467 – SUPPORT ZONE.

 

The consolidation took a further down turn and as expected the indices tested the medium term average of 50dma (Sensex – 30634 and Nifty – 9482). Market recorded a minor recovery from those levels but the short term trend still remains down. If the Support zone of Nifty 9482-9467 is breached, then expect a test of the bullish gap between 9250-9225.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 31194, made a high of 31294, low of 30680 and closed the week at 30921. Thus it closed the week with a loss of 217 points. At the same time the Nifty opened the week at 9594, made a high of 9615, low of 9448 and closed the week at 9520. Thus the Nifty closed the week with a loss of 54 points.

 

On the daily charts, both Sensex and Nifty have formed a white body candle with a longer lower shadow. On the weekly charts, both the indices have formed a black body candle which has a smaller body as compared to real body. Thus more than daily, weekly candlestick pattern suggest a bearish bias in the near term.

 

After breaking short term average of 20dma (Sensex – 31145 and Nifty – 9606), it was expected that the indices would test the medium term average of 50dma (Sensex – 30634 and Nifty – 9482). Market did test the 50dma and rebounded from there. Both the indices continue to remain above the long term average of 200dma (Sensex – 28561 and Nifty – 8827). Thus the Trend in the short term has turned bearish, whereas the Trend in the medium term and the long term timeframe continues to be Bullish.

 

Currently the indices are retracing their short term rise from Sensex 29241 and Nifty 9075. The relevant Retracement levels are at Sensex 30651-30382-30112 and Nifty 9467-9392-9317. Thus 38.2% Retracement along with the 50dma forms a strong Support zone i.e. between Sensex 30651-30634 and Nifty 9482-9467.

 

A break of the above Support zone will lead the market to test the 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 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 is very significant, as a break of this Gap will turn the intermediate 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.

 

A Saucer pattern was completed when the indices closed above Sensex 29077 and Nifty 8968. Golden ratio target has been achieved but the complete pattern target which is at Sensex 32437 and Nifty 10043 remains to be achieved. 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, both continue in Sell mode. RSI (48) suggests bearish momentum. Stochastic Oscillator %K (17) is above %D and hence in Buy mode. ADX has further reduced to 22, which suggest that the Uptrend has lost majority of its strength. Directional Indicators too are in Sell mode as +DI has gone below –DI. MFI (37) suggests Negative Money Flow. OBV has made a lower bottom. Bollinger Band has given a Sell signal this week. Thus Oscillators are suggesting a bearish bias.

 

Options data for July series indicate highest Call Open Interest is at the strike of 9700 and highest Put build-up is at 9400. Thus Options data suggests a trading range with resistance coming in at 9700 and support at 9400.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

9217

9309

9414

9520

9608

9709

9823

Sensex

30069

30338

30638

30921

31255

31522

31889

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Britannia

3690

3623

3793

3898

Buy AvantiFeeds

1495

1462

1545

1597

Buy MFSL

631

616

654

679

Buy TataSteeL

545

532

565

586

Buy ITC

323

317

332

342

 

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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