Archives : FIRST ROAD-BLOCK IN FIVE YEARS - 04/05/2018.

FIRST ROAD-BLOCK IN FIVE WEEKS - 04/05/2018.

 

REVERSAL ZONE ACTS AS A BARRIER.

 

After a Bull onslaught of five weeks, finally the Reversal zone (Nifty 10702-10736) caught up with the market to give a bearish weekly closing. It was first one after five consecutive weeks of bullish weekly closing. A minor Retracement was on the cards as the Nifty had gone up by more than 800 points in five weeks flat. This weakness in the short term will drive out the excess positions created and make the market stronger to take the rally forward. The optimism about the bullishness arises from the way the market has easily cleared all hurdles one by one. It is just a matter of time and some consolidation, before the Reversal zone is again taken out; till then one should use this decline to create long positions in strong stocks.

 


FIRST ROAD-BLOCK IN FIVE WEEKS - 04/05/2018.

 

REVERSAL ZONE ACTS AS A BARRIER.

 

After a Bull onslaught of five weeks, finally the Reversal zone (Nifty 10702-10736) caught up with the market to give a bearish weekly closing. It was first one after five consecutive weeks of bullish weekly closing. A minor Retracement was on the cards as the Nifty had gone up by more than 800 points in five weeks flat. This weakness in the short term will drive out the excess positions created and make the market stronger to take the rally forward. The optimism about the bullishness arises from the way the market has easily cleared all hurdles one by one. It is just a matter of time and some consolidation, before the Reversal zone is again taken out; till then one should use this decline to create long positions in strong stocks.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 35021, made a high of 35357, low of 34847 and closed the week at 34915. Thus it closed the week with a loss of 54 points. At the same time the Nifty opened the week at 10705, made a high of 10784, low of 10601 and closed the week at 10618. Thus the Nifty closed the week with a loss of 74 points.

 

On the daily charts, both the indices have formed a real Black body candle and if we take last three days then it has formed Three Black Crows, which is a Bearish Reversal pattern. On the weekly timeframe, Sensex has formed a small body with an upper shadow whereas Nifty has formed a black body candle. But neither of them can be construed as bearish formation. Thus daily candlestick formation suggests a bearish bias in the near term whereas weekly formation does not indicate the same.

 

Last week, both the indices negated Bearish Cup and Handle pattern on the daily charts and a Bearish Flag pattern on the weekly charts, when the Failure points for both the above patterns (Sensex 34610 & Nifty 10631), were taken out.

 

Current Upward rally 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 at Sensex 33996-34463-34931 and Nifty 10418-10562-10706. The Pull-Back rally tested the 61.8% levels, but could not give a weekly closing above it.

 

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. This week, both Sensex and Nifty tested the Reversal zone but could not give weekly closing above it.

 

This week, both the indices continue to stay above the short term average of 20dma (Sensex – 34450 and Nifty 10551), medium term average of 50dma (Sensex – 33877 and Nifty – 10392) and even the long term average of 200dma (Sensex – 33251 and Nifty – 10283). 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 positive and in Buy mode. RSI (57) suggests momentum has reduced but still it remains bullish. ADX is at 17 suggests trend is being developed. Directional Indicators are in Buy mode as +DI is above –DI. MFI (62) suggests Positive Money Flow. OBV continues in Buy mode, making higher top higher bottom. Thus Oscillators suggest a bullish bias for the near term.

 

Options data for May series indicate highest Call Open Interest is at the strike of 11000 whereas the highest Put build-up is now at the strike of 10500. Thus Options data suggests a trading range with resistance at 11000 & support at 10500.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10340

10428

10536

10618

10736

10887

10975

Sensex

33899

34259

34591

34915

35232

35544

35863

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Page Ind

23636

23244

24262

24939

Buy HDFC Bank

1988

1950

2048

2111

Buy Lux Ind

2043

1993

2125

2213

Buy Ujjivan

420

411

434

449

Manappuram Fin

126

123

131

138


WATCH OUT FOR:

 

Ujjivan
 
 

 

 

 

 

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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