Archives : BACK ON TRACK - 01/09/2017

BACK ON TRACK - 01/09/2017.

 

END OF CORRECTION.

 

It was an interesting week packed with lots of action. Just when it seemed the Correction will be deeper and intensive, the Bulls had different ideas. On Tuesday, the indices managed a close below the 50dma and the stage was set for further pain. But it proved to be a Bear trap as the Nifty effortlessly managed to overcome not only the 50dma but also the strong Resistance zone of 9947-9965. Nifty has managed a close above the Reversal Level but Sensex is yet to do so. Sensex has not been in exact sync with the Nifty this time around, but things might get rectified sooner. Sensex needs to close above 31937-32091.



BACK ON TRACK - 01/09/2017.

 

END OF CORRECTION.

 

It was an interesting week packed with lots of action. Just when it seemed the Correction will be deeper and intensive, the Bulls had different ideas. On Tuesday, the indices managed a close below the 50dma and the stage was set for further pain. But it proved to be a Bear trap as the Nifty effortlessly managed to overcome not only the 50dma but also the strong Resistance zone of 9947-9965. Nifty has managed a close above the Reversal Level but Sensex is yet to do so. Sensex has not been in exact sync with the Nifty this time around, but things might get rectified sooner. Sensex needs to close above 31937-32091.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 31756, made a high of 31944, low of 31360 and closed the week at 31892. Thus it closed the week with a gain of 296 points. At the same time the Nifty opened the week at 9907, made a high of 9983, low of 9783 and closed the week at 9974. Thus the Nifty closed the week with a gain of 117 points.

 

On the daily charts, both Sensex and Nifty have formed an average white body candle in line with current upward movement. On the weekly charts, both Sensex and Nifty have formed a small white body candle with a longer lower shadow. The weekly candlestick formation cannot be given greater significance as it is like a ‘Rest candle’ in line with last two weeks candle formation. Thus daily as well as weekly candlestick patterns suggest a bullish bias in the near term.

 

Since the Nifty has closed above the Resistance zone of 9947-9965 which is due to the confluence of intermittent top and the 61.8% Retracement level. This marks the end of Correction for the Nifty and a resumption of Uptrend which will now propel the Nifty towards life highs again. Interestingly, the corresponding Resistance zone for the Sensex (31937-32091) is yet to be overcome.

 

Three weeks back, the indices bounced back after taking Support at the critical Trendline which is now at Sensex - 31411 and Nifty - 9783. A breach of this Trendline will push the market lower towards testing of intermediate bottom of Sensex 30680 and Nifty 9448.

 

The current Rally has produced two major Bullish Gaps. The first Bullish gap is on daily charts, between Sensex 29780-29681 and Nifty 9250-9225 will act as strong Support. The second Bullish Gap which is more critical as it is also a Weekly Gap i.e. between Sensex 29356-29098 and Nifty 9060-8977 hold the key to the long term trend.

 

This week, both the indices tested and overcame the medium term average of 50dma (Sensex – 31717 and Nifty – 9832) and even the short term average of 20dma (Sensex – 31702 and Nifty – 9885). Both the indices continue to remain above the long term average of 200dma (Sensex - 29380 and Nifty – 9089). Thus the Trend in the short term and medium term timeframe has turned bullish, whereas the trend in the long term timeframe continues to remain upwards.

 

The weekly Bullish Gap between Sensex 29356-29098 and Nifty 9060-8977 forms a strong confluence Support zone as it encompasses the 200dma (Sensex - 29380 and Nifty - 9089) as well as the 50% Retracement level (Sensex - 29202 and Nifty - 9015). Thus if the Correction deepens then the indices will be finding this Gap Support as very strong and difficult to breach. Interestingly, this is the level where the current Cup and Handle formation was completed and a retest of the neckline will be good for the overall health of the market.

 

On the weekly formation, both the indices had 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 in Buy mode. RSI (56) suggests bullish momentum. Stochastic Oscillator %K (85) is above %D and hence in Buy mode. ADX has dropped further to 18, which suggests that the prior trend has lost all its strength. Directional Indicators have converged and are on the verge of generating a Buy signal. MFI (64) suggests Positive Money Flow. OBV continues in Buy mode. Sell signal in Bollinger Band has got negated this week when indices closed above the mean of 20dma. Thus Oscillators are suggesting a bullish bias.

 

Options data for September series indicate highest Call Open Interest remains at the strike of 10000 whereas the highest Put build-up is at 9700. Thus Options data suggests a trading range with resistance coming at 10000 & support at 9700.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

9685

9782

9865

9974

10044

10137

10223

Sensex

30680

31128

31471

31892

32278

32686

33089

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Page Ind

17989

17600

18574

19169

Buy IndusInd

1692

1654

1750

1810

Buy Raymond

811

791

841

872

Buy M&M Fin

435

425

450

466

Buy Just DiaL

399

390

413

428

 

WATCH OUT FOR:


Page Ind
 
 

 

 

 

 

 

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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