Archives : IS THE CORRECTION OVER? - 23/02/2018.

IS THE CORRECTION OVER? - 23/02/2018.

 

STILL A ‘SELL ON RISE’ MARKET.

 

Market has settled into a trading range of 400 Nifty points, between 10300-10700.  Market seems to be finding support at the lower end of the trading range for the past three days. The Pull-back seen on Friday has left market participants wondering whether the Correction is completed. The answer is NO. We are witnessing a Pull-back of the current fall and the Retracement levels are placed at 10618-10724-10830. Very strong Resistance exists in the form of weekly Bearish Gap at 10702-10736 for the Nifty. The current Pull-back may last for couple of days but will face stiff resistance at every higher level and that will provide good shorting opportunity. A break on the lower side of the trading range will open the doors for testing of 200dma.

                                                                                                                                                                                                                                                                                                                                                                                            


IS THE CORRECTION OVER? - 23/02/2018.

 

STILL A ‘SELL ON RISE’ MARKET.

 

Market has settled into a trading range of 400 Nifty points, between 10300-10700.  Market seems to be finding support at the lower end of the trading range for the past three days. The Pull-back seen on Friday has left market participants wondering whether the Correction is completed. The answer is NO. We are witnessing a Pull-back of the current fall and the Retracement levels are placed at 10618-10724-10830. Very strong Resistance exists in the form of weekly Bearish Gap at 10702-10736 for the Nifty. The current Pull-back may last for couple of days but will face stiff resistance at every higher level and that will provide good shorting opportunity. A break on the lower side of the trading range will open the doors for testing of 200dma.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

TECHNICALLY SPEAKING.

 

Sensex opened the week at 34053, made a high of 34167, low of 33554 and closed the week at 34142. Thus it closed the week with a gain of 132 points. At the same time the Nifty opened the week at 10488, made a high of 10499, low of 10302 and closed the week at 10491. Thus the Nifty closed the week with a gain of 39 points.

 

On the daily charts, Sensex has formed a big Opening White body Marubuzo whereas Nifty has formed a big white body candle. On the weekly charts, Sensex has formed a white body Hammer formation whereas Nifty has formed a Dragon-fly Doji. Hammer as well as Dragon-fly Doji can have bullish connotations when they form at the bottom of the trading range, but that is not the case here. Hence daily candlestick pattern indicates bullish bias whereas weekly study does not confirm to the same.

 

Market tested the strong Trendline support (Sensex – 33903 and Nifty – 10409) for the entire week. Even though the indices closed below it for couple of days, the market bounced back and closed above it on Friday. Once the Support level is broken, we can expect testing of the long term average of 200dma (Sensex – 32596 & Nifty – 10098).

 

The indices are staging a bounce back after forming an intermediate bottom at Sensex 33482 and Nifty 10276. Bounce back levels are placed at Sensex 34613-34963-35313 and Nifty 10618-10724-10830. Trend will reverse only when Sensex closes above 35313 and Nifty above 10830, till then every rally will be sold into.

 

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.

 

This week, both the indices have closed below the short term average of 20dma (Sensex – 34640 and Nifty - 10638) as well as medium term average of 50dma (Sensex – 34454 and Nifty – 10610). But still both the indices are above the long term average of 200dma (Sensex – 32596 and Nifty – 10098).  Thus the trend in short term and medium term timeframe remains 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 (44) suggests bearish momentum. ADX has moved higher at 32 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.

 

Options data for March series indicate highest Call Open Interest is now at the strike of 10700 whereas the highest Put build-up is at the strike of 10000. Thus Options data suggests a wide trading range with resistance at 10700 & support at 10000.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10178

10276

10398

10491

10592

10690

10782

Sensex

32992

33405

33752

34142

34535

34874

35260

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell BOSCH

18920

19370

18240

17535

Sell BajajAuto

2986

3046

2896

2799

Sell AsianPaints

1102

1124

1069

1035

Sell L&T

1302

1326

1266

1227

Sell IOC

368

376

355

341

 

WATCH OUT FOR:

 

Asian Paints
 

 

 

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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