Archives : RELIEF RALLY ENDS; TRADING RANGE ESTABLISHED - 19/10/2018.

RELIEF RALLY ENDS; TRADING RANGE ESTABLISHED - 19/10/2018.

 

RESISTANCE ZONE HALTS PULL-BACK RALLY.

 

As expected, the Relief rally hit a road-block at the Resistance of 10700 and fell down, thereby ending the Relief rally. In the process, Market has now established a Trading Range of 10710-10138. Market is likely to trade in the above mentioned Trading Range for next few sessions. Since the Trend remains down, the bias will be negative and hence every bounce is likely to be sold into. As the Volatility continues to spike, the greater probability is likely to be a break on the lower side, which can lead the Nifty to test the previous bottom of 9951 and below.

 


RELIEF RALLY ENDS; TRADING RANGE ESTABLISHED - 19/10/2018.

 

RESISTANCE ZONE HALTS PULL-BACK RALLY.

 

As expected, the Relief rally hit a road-block at the Resistance of 10700 and fell down, thereby ending the Relief rally. In the process, Market has now established a Trading Range of 10710-10138. Market is likely to trade in the above mentioned Trading Range for next few sessions. Since the Trend remains down, the bias will be negative and hence every bounce is likely to be sold into. As the Volatility continues to spike, the greater probability is likely to be a break on the lower side, which can lead the Nifty to test the previous bottom of 9951 and below.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 34971, made a high of 35605, low of 34140 and closed the week at 34315. Thus it closed the week with a loss of 418 points. At the same time the Nifty opened the week at 10524, made a high of 10710, low of 10249 and closed the week at 10303. Thus the Nifty closed the week with a loss of 169 points.

 

On the daily charts, Nifty has formed a Black body Spinning Top whereas Sensex has formed an Opening Black body Marubuzo. On the weekly timeframe both Sensex and Nifty have formed a Black body candle which forms a Stick Sandwich pattern when considered along with last two week’s candles. Stick Sandwich is a Bullish Reversal pattern which requires bullish confirmation in next week. Thus more than daily, weekly candlestick pattern suggests a Bullish bias.

 

On Friday, both the indices opened with a Downward Gap and formed a bearish candle on the daily candlestick chart. This Bearish Gap between Sensex 34563-34727 and Nifty 10380-10436 will act as Resistance in the near term.

 

Last week, the Nifty fell after hitting the Resistance at 10710. On the lower side there exists Support at the recent bottom at 10138. Thus in the near term, both the indices have formed a trading range. Trading Range for Sensex is between 33723-35605 and 10138-10710 for the Nifty. Since the bias is negative, the greater probability trade will be a break on the down side, which will take Nifty to the test the previous bottom of 9951 and further below.

 

Also the Trendline on the weekly timeframe has come to the rescue as the indices took Support at that level (Sensex - 34220 and Nifty - 10277) before bouncing back. The Nifty has managed a weekly close above this level which can be construed as positive.

 

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 current 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 unsuccessfully tested the short term average of 20dma (Sensex – 35472 and Nifty – 10691) and long term average of 200dma (Sensex – 35407 and Nifty – 10778), before falling down. Both the indices are already below both the medium term average of 50dma (Sensex – 37024 and Nifty 11173). 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 (34) suggests Bearish momentum. Stochastic Oscillator %K (32) has gone below %D and hence in Sell mode. ADX is now at 44, suggesting that the Down Trend has matured and may undergo a consolidation. Directional Indicators continue in Sell mode as +DI is below –DI. MFI (40) 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.


INDEX LEVELS:


 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

9951

10074

10198

10303

10417

10547

10710

Sensex

32991

33482

33974

34315

34727

35249

35605


THIS WEEKS RECOMMENDATIONS:


STOCK

CMP

SL

Tgt-1

Tgt-2

Sell ShreeCem

14535

14833

14085

13630

Sell BajajAuto

2510

2562

2432

2353

Sell HDFC

1660

1690

1615

1569

Sell Siemens

874

891

848

821

Sell Hexaware

379

387

367

354


WATCH OUT FOR:

 

Shree Cement
 

 

 

 

 

 

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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