Archives : FINALLY A RELIEF RALLY ENSUES - 12/10/2018

FINALLY A RELIEF RALLY ENSUES - 12/10/2018.

 

NOT A REVERSAL, TREND REMAINS DOWN.

 

After being at the receiving end of the Bearish onslaught for five weeks, the Bulls made a comeback. Just when it seemed that the Nifty may be on its way down to break the 10000 levels, the Bulls fought back; supported by minor Retracement in Crude prices and Rupee turning slightly favourable. This started the much required Relief rally. This can translate into a Pull-Back which can run into a strong Resistance Zone of Nifty 10754-10843. This should be treated only as a Pull-Back and cannot be termed as a Reversal. The Market Trend continues to remain down and all Rallies will be facing stiff Resistances moving higher, and hence will be sold into.

 


FINALLY A RELIEF RALLY ENSUES - 12/10/2018.

 

NOT A REVERSAL, TREND REMAINS DOWN.

 

After being at the receiving end of the Bearish onslaught for five weeks, the Bulls made a comeback. Just when it seemed that the Nifty may be on its way down to break the 10000 levels, the Bulls fought back; supported by minor Retracement in Crude prices and Rupee turning slightly favourable. This started the much required Relief rally. This can translate into a Pull-Back which can run into a strong Resistance Zone of Nifty 10754-10843. This should be treated only as a Pull-Back and cannot be termed as a Reversal. The Market Trend continues to remain down and all Rallies will be facing stiff Resistances moving higher, and hence will be sold into.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 34412, made a high of 34858, low of 33723 and closed the week at 34733. Thus it closed the week with a loss of 357 points. At the same time the Nifty opened the week at 10310, made a high of 10492, low of 10138 and closed the week at 10472. Thus the Nifty closed the week with a loss of 156 points.

 

On the daily charts, both Sensex and Nifty have formed an Opening White Body Marubuzo on Wednesday and Friday. Thursdays Gap down opening and formation of Spinning Top on Sensex and small white body candle with long upper shadow on Nifty indicated strong Buying at lower levels. Fridays Opening White body Marubuzo confirmed Trend Reversal in very short term timeframe. On the weekly charts, both the indices have formed a Bullish Harami after five weeks of Bearish candlestick formation. Bullish Harami requires a confirmation in the form of a real white body candle for the next week. Thus daily as well as weekly candlestick formations are suggesting a Bullish Bias.

 

Any decline in Nifty towards 10200-10130 levels is witnessing strong buying and this has resulted in the prices moving upwards. The current upward movement can be termed as a Pull-Back and the relevant Pull-Back levels are placed at Sensex 35735-36356-36978 and 10758-10949-11140 for the Nifty.

 

Also the Trendline on the weekly timeframe has come to the rescue as the indices took Support at that level (Nifty 10219-10264) before bouncing back. The Nifty has managed a weekly close above this level which can be construed as positive.

 

Last week the market has formed a Bearish Gap between Sensex 35820-35911 and Nifty 10754-10843. Going forward this Gap along with 38.2% Retracement (Sensex – 35735 and Nifty 10758) will act as strong Resistance zone and can have the strength to end any sort of Pull-Back. This Gap is also a Bearish Measuring Gap which will have a target of Sensex 32742 and Nifty 9837.

 

A break of this week’s low of Sensex 33723 and Nifty 10138 will resume the Correction. Intermediate Correction levels are placed at Sensex 33920-32354-30788 and Nifty 10283-9827-9371. Higher degree Correction levels are placed at Sensex 32688-30742-28796 and Nifty 9875-9293-8710. Thus we have two confluence zones which will act as Support Zones. First Confluence Support Zone is between Sensex 32688-32354 and Nifty 9875-9827. Second Confluence Support Zone falls between Sensex 30788-30724 and Nifty 9371-9293.

 

This week, both the indices continue to remain well below the long term average of 200dma (Sensex – 35389 and Nifty 10779). Both the indices are already below both the short term average of 20dma (Sensex – 36050 and Nifty – 10875) as well as medium term average of 50dma (Sensex – 37237 and Nifty 11241). Thus the trend in short term, medium term as well as the long term timeframe remains Bearish.

 

MACD and Price ROC are both negative and in Sell mode. RSI (36) has just turned up from the oversold zone but suggests Bearish momentum. Stochastic Oscillator %K (20) has gone above %D and hence in Buy mode. ADX is now at 48, suggesting that the Down Trend has matured and may undergo a consolidation. Directional Indicators continue in Sell mode as +DI is below –DI. MFI (33) suggests Negative Money Flow. OBV is making lower top lower bottom formation. Bollinger Band continues with its Sell signal. Thus Oscillators are suggesting a bearish bias.

 

Options data for October series indicate highest Call Open Interest is at the strike of 11000 whereas the highest Put build-up is at the strike of 10000. Thus Options data suggests a wide trading range with resistance at 11000 & support at 10000.

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Bajaj Finserv

5813

5710

5974

6147

Buy Bajaj Finance

2287

2239

2361

2436

Buy Raymond

662

647

685

709

Buy Apollo Tyres

217

212

225

234

Buy BHEL

75

73

79

83

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10138

10251

10355

10472

10557

10637

10754

Sensex

33554

33974

34302

34733

35118

35542

35911

 

WATCH OUT FOR:

 

 

 

 

 

 

 

 

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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