Archives : DECISIVE BREAKOUT IN THE OFFING - 22/06/2018.

DECISIVE BREAKOUT IN THE OFFING - 22/06/2018.


20DMA TO THE RESCUE.

 

Trading Range for the Nifty has shrunk to 10700-10900, with the lower end of the trading range coinciding with short term average of 20dma. For the last four days of the week, Nifty was ably supported by 20dma. This was the fifth week of consolidation and a possible breakout seems imminent. Even though current bullish momentum favours a breakout on the upside, possibility of a bearish breakout cannot be ruled out as divergence is playing out in the form of severe underperformance of the Midcaps and Smallcaps vis-à-vis the frontline indices. A break on the upside of the trading range; will lead the Nifty to test the previous top of 11171 and beyond. Whereas a bearish breakout below the 10700 level, will test the support at 10550 followed by higher bottom support at 10417 which coincides with the 200dma.

 


DECISIVE BREAKOUT IN THE OFFING - 22/06/2018.


20DMA TO THE RESCUE.

 

Trading Range for the Nifty has shrunk to 10700-10900, with the lower end of the trading range coinciding with short term average of 20dma. For the last four days of the week, Nifty was ably supported by 20dma. This was the fifth week of consolidation and a possible breakout seems imminent. Even though current bullish momentum favours a breakout on the upside, possibility of a bearish breakout cannot be ruled out as divergence is playing out in the form of severe underperformance of the Midcaps and Smallcaps vis-à-vis the frontline indices. A break on the upside of the trading range; will lead the Nifty to test the previous top of 11171 and beyond. Whereas a bearish breakout below the 10700 level, will test the support at 10550 followed by higher bottom support at 10417 which coincides with the 200dma.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 35698, made a high of 35741, low of 35249 and closed the week at 35689. Thus it closed the week with a gain of 67 points. At the same time the Nifty opened the week at 10830, made a high of 10837, low of 10701 and closed the week at 10821. Thus the Nifty closed the week with a gain of 4 points.

 

On the daily charts, both Sensex and Nifty has formed a big white body candle on Friday. Combined formation for the last two days is Bullish Engulfing pattern, but this cannot be given significance as it has formed in a sideways consolidation. On the weekly charts, both the indices have formed a Dragon-Fly Doji except for the presence of minor upper shadow. Interestingly this is the fifth week of neutral formations as bodies of last five weekly candles are within the trading range of black candle formed six weeks back. This week is likely to see a decisive move. Thus daily charts are hinting at a bullish bias in the near term whereas weekly charts remain undecided.

 

Two weeks back, both the indices have left behind a Bullish Gap between Sensex 35278-35230 and Nifty 10722-10698. This Gap coincided with 20dma; acted as strong Support for last four days of the week as each day took support at this Bullish Gap.

 

Few weeks back, both the indices completed a Bullish Rounding Bottom pattern on the daily charts. It is a Bullish pattern and the target as per that falls at Sensex 36737 and Nifty 11311.

 

Mid-Cap 50 Index (4962) is facing strong Resistance Zone at 5141-5145 which is due to the confluence of 200dma and Retracement levels. A Trend Reversal will occur only if Mid-Cap 50 closes above 5365.

 

Both the indices had a Weekly Bearish Gap between Sensex 34874-35006 and Nifty 10702-10736. This Gap was aided by 61.8% Retracement of the current fall (Sensex – 34931 and Nifty 10706), which is a Reversal level. This week, both the indices have closed not only above the Weekly Bearish Gap but also above their Reversal level of Sensex 34931 and Nifty 10706. Thus if it remains above the Reversal zone, then the indices will target the previous top.

 

This week, both the indices continuously tested and closed above the short term average of 20dma (Sensex – 35360 and Nifty 10738). Both the indices continue to remain above the medium term average of 50dma (Sensex – 35061 and Nifty – 10674) and even the long term average of 200dma (Sensex – 33836 and Nifty – 10420). Thus the trend in short term, medium term as well as in the long term timeframe continues to remain Upwards.

 

MACD is in Sell mode whereas Price ROC is in Buy mode. RSI (57) suggests bullish momentum. Stochastic Oscillator %K (66) is above %D and hence in Buy mode. ADX has fallen to 13, suggesting a sideways consolidation and no strength in trend. Directional Indicators are in Sell mode as +DI is below –DI. MFI (56) suggests Positive Money Flow. OBV continues in sideways mode. Thus Oscillators suggest a mixed bias.

 

Options data for June series indicate highest Call Open Interest is at the strike of 11000 whereas the highest Put build-up is at the strike of 10700. Thus Options data suggests a trading range with resistance at 11000 & support at 10700.


INDEX LEVELS:


 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10514

10628

10722

10821

10929

11009

11117

Sensex

34400

34847

35278

35689

35993

36443

36778

 

THIS WEEKS RECOMMENDATIONS:


STOCK

CMP

SL

Tgt-1

Tgt-2

Buy BajajFinserv

6176

6053

6367

6565

Buy BajajFinance

2336

2290

2405

2479

Buy LuxInd

1800

1765

1854

1913

Buy Endurance

1304

1277

1345

1389

Buy RBL Bank

554

542

573

593


WATCH OUT FOR:

 

Bajaj Finserv
 

 

 

 

 

 

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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