Archives : MAKE OR BREAK MONDAY - 15/12/2017.

‘MAKE OR BREAK’ MONDAY - 15/12/2017.

 

VOLATILE WEEK ENDS ON POSITIVE NOTE.

 

It was expected to be a volatile week and it did not disappoint on that aspect. It was a text book case of Volatility build-up, which peaked on Thursday and as soon as the Exit Polls results were out, the market experienced Volatility Crunch. Despite the prediction of Exit polls, Monday will be a ‘Make or Break’ day as the market will grapple with actual results of the Gujarat Election. There is little room for upward surprise but the same cannot be said for the downside. Market has closed above the key reversal levels of Sensex 33369 and Nifty 10316 and hence there is a good probability of market testing the previous top. But any unpleasant surprise on Monday will test the key support levels of 10141-10033.

 


‘MAKE OR BREAK’ MONDAY - 15/12/2017.

 

VOLATILE WEEK ENDS ON POSITIVE NOTE.

 

It was expected to be a volatile week and it did not disappoint on that aspect. It was a text book case of Volatility build-up, which peaked on Thursday and as soon as the Exit Polls results were out, the market experienced Volatility Crunch. Despite the prediction of Exit polls, Monday will be a ‘Make or Break’ day as the market will grapple with actual results of the Gujarat Election. There is little room for upward surprise but the same cannot be said for the downside. Market has closed above the key reversal levels of Sensex 33369 and Nifty 10316 and hence there is a good probability of market testing the previous top. But any unpleasant surprise on Monday will test the key support levels of 10141-10033.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 33317, made a high of 33621, low of 32836 and closed the week at 33462. Thus it closed the week with a gain of 212 points. At the same time the Nifty opened the week at 10310, made a high of 10373, low of 10141 and closed the week at 10333. Thus the Nifty closed the week with a gain of 68 points.

 

On the weekly charts, both the indices have formed a small white body Spinning Top which along with previous weeks candle lie with the big black body candle formed three weeks back. Hence this weeks candle is like a ‘Rest’ candle which does not have much impact on direction of the indices. On the daily charts, Sensex has formed almost a Shooting Star like formation except for the presence of lower shadow. Nifty has formed a Spinning Top formation. Thus daily as well as weekly candlestick pattern indicate a neutral to slight bullish bias in the near term.

 

As mentioned in the previous week’s article, we required a closing above the critical Trend Reversal level of Sensex 33369 and Nifty 10316. Since both Sensex and Nifty have managed to close the week above these levels, it is an indication that the indices will now target previous life-high levels very soon.

 

In the immediate term, Nifty faces a resistance in the form of a Bearish Gap between 10332-10345. Besides these, Trendline Resistance for the Sensex falls at 33678 and for Nifty it is at 10338. Hence these levels will act as immediate resistances.

 

Two weeks back the indices suffered a classic Bear trap. It resulted in the indices making an intermediate bottom at Sensex 32565 and Nifty 10033. This is the support level from where the market bounced back.

 

A break below the above mentioned intermediate low i.e. Sensex 32565 and Nifty 10033 will indicate that the indices will go lower to test the key level i.e. the long term higher bottom of 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 again, both the indices flirted with both the short term average of 20dma (Sensex - 33275 and Nifty - 10262) as well as the medium term average of 50dma (Sensex – 33032 and Nifty – 10248), but the market saw a sharp recovery on Thursday and Friday and as a result both the indices managed to close above them. Both the indices still remain well above the long term average of 200dma (Sensex – 31415 and Nifty – 9747).  Thus the trend in short term as well as medium term timeframe has recovered and is Upward, 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 has given a fresh Buy signal and so has the Stochastic Oscillator. RSI (56) has once again moved into bullish zone indicating Bullish momentum. ADX has dropped to 18, which suggests that there is no clear trend. Directional Indicators have just signalled a buy. MFI (33) suggests Negative Money Flow. OBV is still in Buy mode making higher top higher bottom formation. Thus Oscillators are suggesting a bullish bias for the near term.

 

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


INDEX LEVELS:


 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10033

10141

10232

10333

10451

10589

10693

Sensex

32312

32565

32992

33462

33865

34291

34677

 

THIS WEEKS RECOMMENDATIONS:


STOCK

CMP

SL

Tgt-1

Tgt-2

Buy SRF

1874

1835

1934

1997

Buy STFC

1406

1378

1448

1491

Buy JetAir

703

687

727

752

Buy DCB

190

186

197

205

Buy FutConsumer

67

65

71

76


WATCH OUT FOR:

 

DCB

 

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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