Archives : SUPPORT ZONE : 11249-11245 : TO THE RESCUE - 14/09/2018

SUPPORT ZONE : 11249-11245 - TO THE RESCUE - 07/09/2018.

 

STILL NOT OUT OF THE WOODS.

 

It was a déjà vu of previous week as the Market mimicked the happenings of the previous week as it lost heavily in the first two days of the week. Monday and Tuesday saw the Nifty once again losing around 350 points and Sensex around 1100 points. But somehow Nifty managed to recover lost ground by bouncing back after taking Support at the Support level mentioned in previous week of 11249-11245. It proved to be highly accurate as the market bounced back from a low of 11250, bouncing off with ferocious strength as the Nifty recovered majority of lost ground in two days flat. Despite the strong pull-back, one cannot say with certainty that we are out of the woods. Nifty needs a close above 11565-11603 to safely say that the Correction is complete.

 


SUPPORT ZONE : 11249-11245 - TO THE RESCUE - 07/09/2018.

 

STILL NOT OUT OF THE WOODS.

 

It was a déjà vu of previous week as the Market mimicked the happenings of the previous week as it lost heavily in the first two days of the week. Monday and Tuesday saw the Nifty once again losing around 350 points and Sensex around 1100 points. But somehow Nifty managed to recover lost ground by bouncing back after taking Support at the Support level mentioned in previous week of 11249-11245. It proved to be highly accurate as the market bounced back from a low of 11250, bouncing off with ferocious strength as the Nifty recovered majority of lost ground in two days flat. Despite the strong pull-back, one cannot say with certainty that we are out of the woods. Nifty needs a close above 11565-11603 to safely say that the Correction is complete.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 38348, made a high of 38354, low of 37342 and closed the week at 38090. Thus it closed the week with a loss of 299 points. At the same time the Nifty opened the week at 11570, made a high of 11573, low of 11250 and closed the week at 11515. Thus the Nifty closed the week with a loss of 74 points.

 

On the daily charts, both Sensex and Nifty have formed a White body candle which has come as a confirmation of Bullish Harami formation which got completed on Thursday. On the weekly chart, both the indices have formed a Black Body Hammer which is a Bullish Reversal pattern. Thus daily as well as weekly candlestick formations are showing Bullish Bias.

 

The Bears repeated the dose of last week and it was like a repeat as the Sensex fell around 1100 points in two days flat and Nifty around 350 points, before bouncing back. Immediate Correction levels are placed at Sensex 37199-36646-36093 and 11247-11089-10930 for the Nifty. Higher degree Correction levels are placed at Sensex 36504-35736-34969 and Nifty 11069-10856-10643. 38.2% Retracement level of the Immediate Rally along with Golden Ratio forms a strong first Confluence Support Zone between Sensex 37199-37038 and Nifty 11247-11245, which proved to be a strong support, as the Nifty made an intermittent bottom at 11250. Second Confluence Support Zone is between Sensex 36646-36504 and Nifty 11089-11069.

 

This week saw testing of the strong daily as well as weekly Bullish Gap between Sensex 38050-38022 and Nifty 11499-11486 as well as second Bullish Gap between Sensex 37643-37582 and Nifty 11370-11368, before bouncing back. The first Bullish Gap is at Sensex 37131-37061 and Nifty 11210-11185, which is an extremely strong Support for the market.

 

Both Sensex and Nifty are in Pull-back mode and any closing above the confluence zone of Sensex 38360-38421 and Nifty 11565-11603 will signal the end of Correction.

 

Both Sensex and Nifty completed a Rounding Bottom formation and the Target as per that pattern falls at Sensex 40403 and Nifty 12391. Also both the indices had completed a Bullish Cup and Handle pattern which has a target of Sensex 39503 and Nifty 11907. The above targets will be achieved as long as Sensex remains above 34937 and Nifty above 10557.

 

This week, both the indices tested both the short term average of 20dma (Sensex – 38233 and Nifty – 11545) as well as medium term average of 50dma (Sensex – 37437 and Nifty 11304) before bouncing back. 50dma came to rescue as both indices bounced back from there, but somehow could not close above 20dma. Both the indices continue to remain well above the long term average of 200dma (Sensex – 35158 and Nifty – 10730). Thus the trend in short term timeframe has turned down, whereas the trend in medium term as well as long term time-frame remains Bullish.

 

MACD and Price ROC are in Sell mode. RSI (53) suggests bullish momentum. Stochastic Oscillator %K (26) is above %D and hence in Buy mode. ADX has reduced to 27, suggesting that the Uptrend is under consolidation. Directional Indicators are in Sell mode as +DI is below –DI. MFI (41) suggests Negative Money Flow. OBV is making higher top higher bottom formation. Bollinger Band has given a Sell signal this week. Thus Oscillators are suggesting a mixed bias.

 

Options data for September series indicate highest Call Open Interest is at the strike of 11800 whereas the highest Put build-up is at the strike of 11400. Thus Options data suggests a narrow trading range with resistance at 11800 & support at 11400.

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy BajajFinserv

6709

6589

6891

7085

Buy PEL

3048

2977

3146

3249

Buy Vedanta

235

229

244

254

Buy JindalSteeL

233

228

241

250

SonataSoftware

394

386

407

421

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

11234

11340

11430

11515

11603

11700

11793

Sensex

37061

37361

37752

38090

38487

38838

39162


WATCH OUT FOR:

 

Jindal Steel

 

 

 

 

 

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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