Archives : BEARISHNESS TO INCREASE; NIFTY IN 4 DIGITS SOON -26/10/2018.

BEARISHNESS TO INCREASE; NIFTY IN 4 DIGITS SOON - 26/10/2018.

 

FOCUS SHIFTS TO SUPPORT ZONES.

 

Just when it seemed that the Nifty will respect the support level of 10100 for sometime, it did not. The same level was taken out with ease and Nifty is now on the verge of re-entering the 4 digit mark. Volatility is seeing a sharp increase as every bounce is being sold into. Testing of previous bottom i.e. 9951 is on the cards and chance of that level surviving seems very dull. Strong Support zones for Nifty are placed at 9875-9827 and 9371-9293 and these zones are likely to play a key role in deciding the future direction of Nifty.

 


BEARISHNESS TO INCREASE; NIFTY IN 4 DIGITS SOON - 26/10/2018.

 

FOCUS SHIFTS TO SUPPORT ZONES.

 

Just when it seemed that the Nifty will respect the support level of 10100 for sometime, it did not. The same level was taken out with ease and Nifty is now on the verge of re-entering the 4 digit mark. Volatility is seeing a sharp increase as every bounce is being sold into. Testing of previous bottom i.e. 9951 is on the cards and chance of that level surviving seems very dull. Strong Support zones for Nifty are placed at 9875-9827 and 9371-9293 and these zones are likely to play a key role in deciding the future direction of Nifty.

 

200 WEEKSMA TO BE TESTED.

 

Interestingly since 2008, whenever Nifty has breached the support of 50 WeeksMA (10703), it has invariably taken Support at the 200 WeeksMA (9112). Also a critical Semi-Log Trendline on weekly timeframe, joining the lows of 2008 and 2016 has now been broken. The path seems set for the Nifty to test the 200 WeeksMA. The only occasion when the critical level of 200 WeeksMA was broken was in 2008.

 

Nifty SemiLog Weekly MA
 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 34689, made a high of 34748, low of 33291 and closed the week at 33349. Thus it closed the week with a loss of 966 points. At the same time the Nifty opened the week at 10405, made a high of 10408, low of 10004 and closed the week at 10030. Thus the Nifty closed the week with a loss of 273 points.

 

On the daily charts, Nifty has formed a Real black body candle whereas Sensex has formed big Opening Black body Marubuzo. On the weekly timeframe, both Sensex and Nifty have formed a big Black body candle almost on lines of complete body Marubuzo. Thus daily as well as weekly candlestick pattern suggests a Bearish bias.

 

The Bearish Gap between Sensex 34563-34727 and Nifty 10380-10436, created two weeks back was in focus for the last week. Both the indices went up and tested the above Gap and then fell from there. Thus as a result, a break of the above Gap on the upside will indicate a reversal in the short term time-frame.

 

At higher levels, the market has formed a Bearish Gap between Sensex 35820-35911 and Nifty 10754-10843. Going forward this Gap 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 has a target of Sensex 32742 and Nifty 9837.

 

Just when it seemed that the intermediate bottom (Sensex 33723 and Nifty 10138) created three weeks back would hold, it was breached. As a result the testing of the previous bottom (Sensex – 32483 and Nifty – 9951) is now on the cards. Probability of these levels surviving seems remote.

 

Also the Trendline on the daily timeframe (Sensex - 34198 and Nifty - 10275) which has been providing Support to the indices has now been breached. Thus this Trendline will now act as stiff Resistance in the near term.

 

Correction resumed this week when the recent low of Sensex 33723 and Nifty 10138 was broken. 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 below the short term average of 20dma (Sensex – 34752 and Nifty – 10456), medium term average of 50dma (Sensex – 36628 and Nifty – 11047) and even the long term average of 200dma (Sensex – 35405 and Nifty – 10770). 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 (30) suggests strong Bearish momentum. Stochastic Oscillator %K (09) is below %D and hence in Sell mode. ADX (41) suggests that the Down Trend has matured and may undergo a consolidation. Directional Indicators continue in Sell mode as +DI is below –DI. MFI (42) 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 November 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

9740

9824

9921

10030

10166

10290

10436

Sensex

33247

32565

32991

33349

33726

34134

34563


THIS WEEKS RECOMMENDATIONS:


STOCK

CMP

SL

Tgt-1

Tgt-2

Sell UBL

1115

1138

1080

1044

Sell AuroPharma

720

735

697

674

Sell Cipla

604

616

586

567

Sell AxisBank

538

549

521

503

Sell VEDL

204

209

196

187


WATCH OUT FOR:

 

Axis Bank
 

 

 

 

 

 

 

 

 


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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