Archives : PULL-BACK GETS STRONGER; TREND TURNS POSITIVE - 13/04/2018

PULL-BACK GETS STRONGER; TREND TURNS POSITIVE - 13/04/2018.

 

WEEKLY THREE WHITE SOLDIERS.

 

As expected, the Pull-back continues and is getting stronger. In the process, not only both the indices have managed to overcome the 38.2% Retracement level of Sensex 33996 & Nifty 10418, but also managed to close above the medium term average of 50dma. Thus as a result, all the three trends viz. short term, medium term and long term trend has turned positive. On the weekly charts, both the indices have formed a Bullish Reversal pattern called Three White Soldiers. Thus the scenario has turned positive and one should use declines to create long positions. But we are not yet out of the downtrend, which will happen only when Nifty closes above weekly Bearish Gap of 10702-10736.

 


PULL-BACK GETS STRONGER; TREND TURNS POSITIVE - 13/04/2018.

 

WEEKLY THREE WHITE SOLDIERS.

 

As expected, the Pull-back continues and is getting stronger. In the process, not only both the indices have managed to overcome the 38.2% Retracement level of Sensex 33996 & Nifty 10418, but also managed to close above the medium term average of 50dma. Thus as a result, all the three trends viz. short term, medium term and long term trend has turned positive. On the weekly charts, both the indices have formed a Bullish Reversal pattern called Three White Soldiers. Thus the scenario has turned positive and one should use declines to create long positions. But we are not yet out of the downtrend, which will happen only when Nifty closes above weekly Bearish Gap of 10702-10736.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 33653, made a high of 34313, low of 33578 and closed the week at 34192. Thus it closed the week with a gain of 566 points. At the same time the Nifty opened the week at 10333, made a high of 10519, low of 10328 and closed the week at 10480. Thus the Nifty closed the week with a gain of 149 points.

 

On the daily charts, Sensex has formed a small white body Spinning Top whereas Nifty has formed a small black body Spinning Top. On the weekly timeframe, both the indices formed a real white body candle and in the process completed Three White Soldiers. Three white Soldiers is a strong Bullish Reversal pattern which can induce not only Price Reversal but also Trend Reversal. Thus daily candlestick analysis suggests indecisiveness, whereas weekly timeframe indicates a bullish bias.

 

Since the Sensex and Nifty managed to seek support on the very critical level of 50 WeeksMA (Sensex – 32498 & Nifty 10060), a Pull-back rally happened. It is a Pull-back of the fall from 36443 to 32483 for the Sensex and 11171 to 9951 for the Nifty. The relevant Pull-back levels are placed at Sensex 33996-34463-34931 and Nifty 10418-10562-10706. The Pull-Back rally is getting strong and as a result both the indices have managed to overcome the 38.2% Retracement and now gunning for higher levels. As long as the indices continue to close above the 50 WeeksMA, there is little to worry about the downside.

 

Both the indices formed a Bearish Cup and Handle pattern on the daily charts and whose target falls at Sensex 30521 & 9381. On the weekly charts, both the indices have formed a Bearish Flag pattern with similar targets. The targets will be achieved as long as Sensex continues to stay below the failure point of 34610 & Nifty below 10631.

 

We are in the midst of a strong Correction of the intermediate 13 months rally from the low of Sensex 25717 and Nifty 7893. The Retracement levels for that are placed at Sensex 32347-31081-29815 and Nifty 9919-9533-9146. We also need to consider the last two years rally which started from a low Sensex 22494 and Nifty 6825. The relevant Correction levels are placed at Sensex 31115-29469-27823 and Nifty 9511-8999-8486. Strong confluence zone is formed between Sensex 31081-31115 and Nifty 9533-9511, which can possibly act as Target for the market.

 

Both the indices have formed a Weekly Bearish Gap between Sensex 34874-35006 and Nifty 10702-10736. This Gap is aided by 61.8% Retracement of the current fall (Sensex – 34931 and Nifty 10706). 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 overcame and closed above the medium term average of 50dma (Sensex – 33867 and Nifty – 10400). Also Sensex and Nifty continue to remain above the long term average of 200dma (Sensex – 33016 and Nifty – 10215) and even the short term average of 20dma (Sensex – 33375 and Nifty – 10242). Thus the trend in medium term has turned positive, whereas the trend in the long term and short term timeframe continues to remain Bullish.

 

MACD and Price ROC are both in Buy mode. RSI (59) suggests bullish momentum. ADX is at 17 suggests no clear trend. Directional Indicators are in Buy mode as +DI has gone above –DI. MFI (68) suggests Positive Money Flow. OBV continues in Buy mode, making higher top higher bottom. Thus Oscillators suggests a bullish bias for the near term.

 

Options data for April series indicate highest Call Open Interest is now at the strike of 10500 whereas the highest Put build-up is now at the strike of 10300. Thus Options data suggests a narrow trading range with resistance at 10500 & support at 10300.


THIS WEEKS RECOMMENDATIONS:


STOCK

CMP

SL

Tgt-1

Tgt-2

Buy MRF

78091

76400

80697

83444

Buy KotakBank

1151

1130

1183

1217

Buy Escorts

946

925

978

1013

Buy MindTree

852

833

881

1013

Buy TVSMotors

661

645

687

715


INDEX LEVELS:


 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10182

10276

10398

10480

10566

10659

10736

Sensex

33034

33482

33865

34192

34535

34874

35166


WATCH OUT FOR:

 

MRF
 
Kotak Mah Bank
 
Escorts

 

 

 

 

 

 

 

 

 

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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