Archives : ON COURSE TO TEST 200DMA - 16 02 2018

ON COURSE TO TEST ‘200DMA’ - 16/02/2018.

 

BEARISH MOMENTUM INTENSIFIES.

 

Last week saw our market bouncing back from many gap-down openings, especially the mid-cap and small-cap stocks. This week saw three gap-up openings being sold into, with the market along with mid-cap and small-cap stocks ending on the lower side. This is a clear indication that the divergence which existed two weeks back between the front-line stocks and mid-cap stocks has now reduced and is now inline. The bearish momentum is now on the rise and the market seems to be headed southwards to test the long term average of 200dma. There exists a strong support at Nifty-10370 which now stands between the market and the 200dma.

 


ON COURSE TO TEST ‘200DMA’ - 16/02/2018.

 

BEARISH MOMENTUM INTENSIFIES.

 

Last week saw our market bouncing back from many gap-down openings, especially the mid-cap and small-cap stocks. This week saw three gap-up openings being sold into, with the market along with mid-cap and small-cap stocks ending on the lower side. This is a clear indication that the divergence which existed two weeks back between the front-line stocks and mid-cap stocks has now reduced and is now inline. The bearish momentum is now on the rise and the market seems to be headed southwards to test the long term average of 200dma. There exists a strong support at Nifty-10370 which now stands between the market and the 200dma.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 34203, made a high of 34535, low of 33957 and closed the week at 34010. Thus it closed the week with a minor gain of 5 points. At the same time the Nifty opened the week at 10518, made a high of 10618, low of 10434 and closed the week at 10452. Thus the Nifty closed the week with a minor loss of 2 points.

 

On the daily charts, both the indices have formed a big black body candle. On the weekly charts, both the indices formed a small body candle which is almost like a Homing Pigeon. This can act as a Bullish reversal pattern if we get a confirmation. Thus candlestick study indicates bearishness in the near term.

 

On the way down, strong Support in the form of Trendline falls at Sensex 33742 and Nifty 10370. Once the Support levels are breached, one can expect the indices to move downwards and test the long term average of 200dma (Sensex – 32498 and Nifty – 10070).

 

Two weeks back, the indices staged a bounce back after forming an intermediate bottom at Sensex 33482 and Nifty 10276. Bounce back levels were placed at Sensex 34613-34963-35313 and Nifty 10618-10724-10830. The bounce-back is now complete and we seem on the way to down to retest the intermediate bottom at Sensex 33482 and Nifty 10276.

 

Both the indices have formed a Weekly Bearish Gap between Sensex 34874-35006 and Nifty 10702-10736. This Gap is aided by 50% Retracement of the current fall (Sensex – 34963 and Nifty 10724) and also the 50% Retracement of Intermediate Rise from low of Nifty 10033 i.e. at Sensex 34962 and Nifty 10737. Thus as seen, the weekly Bearish Gap is aided by strong Resistances which will make the confluence zone into a strong Resistance zone.

 

Both the indices are in Correction mode. Intermediate Correction levels are at Sensex 34395-33763-33130 and Nifty 10605-10429-10254.

 

This week, both the indices have closed below the short term average of 20dma (Sensex – 35119 and Nifty - 10780) as well as medium term average of 50dma (Sensex – 34378 and Nifty – 10590). But still both the indices are above the long term average of 200dma (Sensex – 32498 and Nifty – 10070).  Thus the trend in short term and medium term timeframe has turned bearish, whereas the trend in the long term timeframe continues to remain Bullish.

 

MACD and Price ROC are both negative and in Sell mode. RSI (39) suggests bearish momentum. ADX has moved higher at 31 suggesting that the Down Trend has gathered some strength. Directional Indicators are in Sell mode as +DI remains below –DI. MFI (32) suggests Negative Money Flow. OBV continues in Sell mode. Thus Oscillators are suggesting a bearish bias for the near term.

 

Open Interest PCR is at lower level at 0.83, which indicates strong bearishness. Options data for February series indicate highest Call Open Interest is now at the strike of 10600 whereas the highest Put build-up is at the strike of 10000. Thus Options data suggests a wide trading range with resistance at 10600 & support at 10000.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10137

10232

10329

10452

10566

10666

10782

Sensex

32886

33321

33703

34010

34342

34666

35006

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell Eicher Mot

27328

27849

26550

25727

Sell MFSL

501

514

480

457

Sell UltraTech

4166

4260

4025

3881

Sell UBL

1010

1034

973

934

Sell Yes Bank

312

319

301

289


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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