Archives : FAILURES & REVERSALS - 20/04/2018.

FAILURES & REVERSALS - 20/04/2018.

 

APPROACHING CRITICAL LEVELS.

 

The current Pull-Back started from the lows of 9951 around one month back. As per weekly timeframe, the market took support at the critical level of 50 WeeksMA and formed a Tweezer Bottom which triggered the current rally. After completing Three White Soldiers last week, this week too has formed a Bullish Candlestick pattern. The question thus arises: Is the Correction complete? The answer lies in the swift and smooth upward rally which saw critical levels like the 200dma being taken out with ease. Currently the Market is grappling with the 50% Retracement levels (Nifty 10562) of the entire fall. As we move higher, Market will be challenging the Failure point (Nifty 10631) of Bearish Cup & Handle as well as the Reversal zone (Nifty 10702-10736). The Bulls are keeping their fingers crossed despite the turbulence; as the price trajectory seems upwards and the Trend remaining positive.

 

 


FAILURES & REVERSALS - 20/04/2018.

 

APPROACHING CRITICAL LEVELS.

 

The current Pull-Back started from the lows of 9951 around one month back. As per weekly timeframe, the market took support at the critical level of 50 WeeksMA and formed a Tweezer Bottom which triggered the current rally. After completing Three White Soldiers last week, this week too has formed a Bullish Candlestick pattern. The question thus arises: Is the Correction complete? The answer lies in the swift and smooth upward rally which saw critical levels like the 200dma being taken out with ease. Currently the Market is grappling with the 50% Retracement levels (Nifty 10562) of the entire fall. As we move higher, Market will be challenging the Failure point (Nifty 10631) of Bearish Cup & Handle as well as the Reversal zone (Nifty 10702-10736). The Bulls are keeping their fingers crossed despite the turbulence; as the price trajectory seems upwards and the Trend remaining positive.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 33944, made a high of 34591, low of 33899 and closed the week at 34415. Thus it closed the week with a gain of 223 points. At the same time the Nifty opened the week at 10398, made a high of 10594, low of 10396 and closed the week at 10564. Thus the Nifty closed the week with a gain of 84 points.

 

On the daily charts, Sensex has formed a black body Spinning Top whereas Nifty has formed a white body Spinning Top. On the weekly timeframe, both the indices formed a big Opening White body Marubuzo after completing Three white Soldiers last week. Thus daily candlestick analysis suggests indecisiveness, whereas weekly timeframe indicates a bullish bias.

 

After taking support on the very critical level of 50 WeeksMA, a Pull-back rally commenced. 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 now testing the 50% levels. As long as the indices continue to close above the 200dma, there is little to worry about the downside.

 

Both the indices formed a Bearish Cup and Handle pattern on the daily charts and a Bearish Flag pattern on the weekly charts with similar targets. The Failure points for both the above patterns are placed at Sensex 34610 & Nifty 10631. Interestingly, both indices are getting close to the failure points, which will make for an interesting watch.

 

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 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), which is a Reversal level. Thus as seen, the weekly Bearish Gap is aided by strong Resistances which will not only make the confluence zone into a strong Resistance zone, but a Reversal zone as well.

 

This week, both the indices continue to stay above the short term average of 20dma (Sensex – 33672 and Nifty 10332), medium term average of 50dma (Sensex – 33750 and Nifty – 10364) and even the long term average of 200dma (Sensex – 33102 and Nifty – 10241). Thus the trend in short term, medium term as well as in the long term timeframe continues to remain Bullish.

 

MACD and Price ROC are both in Buy mode. RSI (62) suggests bullish momentum. ADX is at 14 suggests no clear trend. Directional Indicators are in Buy mode as +DI has gone above –DI. MFI (77) 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 11000 whereas the highest Put build-up is now at the strike of 10000. Thus Options data suggests a trading range with resistance at 11000 & support at 10000.

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy ForceMotors

3139

3068

3248

3374

Buy NiiTTech

993

971

1027

1063

Buy HCLTech

1062

1040

1095

1129

Buy VGuard

250

243

261

273

Buy JsWSteeL

322

314

335

349

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10276

10383

10478

10564

10659

10736

10817

Sensex

33354

33703

34077

34415

34874

35166

35542

 

WATCH OUT FOR:

 

 

HCL Tech
 

 

 

 

 


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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