Archives : INTERMEDIATE TREND REVERSES - 01/12/2017.

INTERMEDIATE TREND REVERSES - 01/12/2017.

 

AT THE SUPPORT ZONE.

 

Just when it seemed that the market was set to overcome previous highs, there was a twist. Both the indices spiralled downwards and in the process both Sensex and Nifty have registered a lower top. A break below the previous intermediate low of Sensex 32683 and Nifty 10094 will confirm a lower top lower bottom formation. In the process, short term and medium term trend has turned negative. Interestingly both the indices have closed right at the Support zone between Sensex 32804-32670 and Nifty 10120-10094. This time the support levels are under threat more than before and hence a break below the Support zone will lead to test of the Correction levels of Sensex 32474-32145 and 10088-9993 for the Nifty.

 


INTERMEDIATE TREND REVERSES - 01/12/2017.

 

AT THE SUPPORT ZONE.

 

Just when it seemed that the market was set to overcome previous highs, there was a twist. Both the indices spiralled downwards and in the process both Sensex and Nifty have registered a lower top. A break below the previous intermediate low of Sensex 32683 and Nifty 10094 will confirm a lower top lower bottom formation. In the process, short term and medium term trend has turned negative. Interestingly both the indices have closed right at the Support zone between Sensex 32804-32670 and Nifty 10120-10094. This time the support levels are under threat more than before and hence a break below the Support zone will lead to test of the Correction levels of Sensex 32474-32145 and 10088-9993 for the Nifty.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 33640, made a high of 33770, low of 32797 and closed the week at 32832. Thus it closed the week with a loss of 847 points. At the same time the Nifty opened the week at 10361, made a high of 10409, low of 10108 and closed the week at 10121. Thus the Nifty closed the week with a loss of 268 points.

 

On the daily charts, both the indices have formed a big black body candle for the second day running. On the weekly charts, both Sensex and Nifty have formed a big black body candle. This black body has undone the bullish work of previous week’s candle. Thus daily as well as weekly charts suggest a bearish bias in the near term.

 

This week both the indices have breached the first Bullish Gap between 33278-33165 for the Sensex and 10268-10232 for the Nifty. As a result, both Sensex and Nifty are now at the critical Support in the form of Bullish Gap between Sensex 32804-32670 and Nifty 10120-10104. This Bullish Gap has acted as Support and market have closed just above this level. A break of this Gap will result in the intermediate trend turning down and the Correction will resume. The Correction levels remain at Sensex 32474-32145 and 10088-9993 for the Nifty.

 

Both the indices have registered a lower top and now they have closed very close to the intermediate bottom which is at Sensex 32683 and Nifty 10094. A break below this will confirm a lower top lower bottom formation for the first time and will be on course to test the Retracement level of Sensex 32474-32145 and Nifty 10088-9993.

 

The key level to watch out for in this entire upward rally is the support taken at the higher bottom which is at Sensex 31128 and Nifty 9685. A break of this support will interrupt the weekly higher top higher bottom formation sequence for the indices for the first time since December 2016. As a result, we will be looking at the Correction of the entire rally which started from Sensex 25717 and 7896 for the Nifty.

 

This week, both the indices breached and closed below the short term average of 20dma (Sensex – 33333 and Nifty – 10297) and even the medium term average of 50dma (Sensex – 32734 and Nifty – 10183). Still both the indices remain well above the long term average of 200dma (Sensex – 31189 and Nifty – 9679).  Thus the trend in short term as well as medium term has turned bearish, whereas the trend in the long term timeframe still continues to remain Bullish.

 

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 continues in its Sell mode despite being in the positive zone. Price ROC is positive and in Buy mode. RSI (38) suggests bearish momentum. Stochastic Oscillator %K (45) continues in Sell mode. ADX remains low at 19, which suggests that there is no clear trend. Directional Indicators are now in Sell mode. MFI (41) suggests Negative Money Flow. OBV is still in Buy mode making higher top higher bottom formation. Thus majority of Oscillators are suggesting a bearish bias this week.

 

Options data for December series indicate highest Call Open Interest is at the strike of 10500 whereas the highest Put build-up has shifted lower to 10000. Thus Options data suggests a trading range with resistance at 10500 & support at 10000.

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell Grasim

1150

1172

1117

1083

Sell HCL Tech

830

846

806

781

Sell Tata SteeL

681

696

658

634

Sell Tech Mah

473

484

456

438

Sell KtKBank

153

156

148

142

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

9861

9955

10043

10121

10240

10367

10490

Sensex

31769

32209

32524

32832

33165

33520

33865

 

WATCH OUT FOR:

 

HCL Tech
 
Grasim
 
 

 

 

 

 


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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