Archives : R-ZONE PREVAILS; PULL-BACK ENDS - 22/11/2018

R-ZONE PREVAILS; PULL-BACK ENDS - 22/11/2018.

 

200 DMA TESTED, BUT NOT CROSSED.

 

The market reacted as per expectations, as the indices tested but failed to cross the hurdle provided by the strong Resistance zone of Bearish Gap between 10754-10843 along with the long term average of 200dma (10745). Thus the market continues to move in a Trading Range between lower boundary of Nifty 10000 to the upper boundary of Nifty 10800. At the upper end of the Trading Range, Nifty has formed Three Black Crows pattern which not only indicates a price reversal but also a Trend Reversal.

 

50 WEEKSMA – A STRONG RESISTANCE.

 

The current Nifty movement is defined by the weekly moving averages viz. the Support of 100 WeeksMA (10124) and the Resistance provided by 50 WeeksMA (10729). As predicted last week, the Nifty tested the 50 WeeksMA but could not close above that and hence the resultant downward move indicates a slide once again towards the Support of 100 WeeksMA. Nifty close below 10401 for next week, will signal a Bearish break of 20 MonthsMA which has not been breached since June 2016.

 

 



R-ZONE PREVAILS; PULL-BACK ENDS - 22/11/2018.

 

200 DMA TESTED, BUT NOT CROSSED.

 

The market reacted as per expectations, as the indices tested but failed to cross the hurdle provided by the strong Resistance zone of Bearish Gap between 10754-10843 along with the long term average of 200dma (10745). Thus the market continues to move in a Trading Range between lower boundary of Nifty 10000 to the upper boundary of Nifty 10800. At the upper end of the Trading Range, Nifty has formed Three Black Crows pattern which not only indicates a price reversal but also a Trend Reversal.

 

50 WEEKSMA – A STRONG RESISTANCE.

 

The current Nifty movement is defined by the weekly moving averages viz. the Support of 100 WeeksMA (10124) and the Resistance provided by 50 WeeksMA (10729). As predicted last week, the Nifty tested the 50 WeeksMA but could not close above that and hence the resultant downward move indicates a slide once again towards the Support of 100 WeeksMA. Nifty close below 10401 for next week, will signal a Bearish break of 20 MonthsMA which has not been breached since June 2016.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 35647, made a high of 35818, low of 34937 and closed the week at 34981. Thus it closed the week with a loss of 476 points. At the same time the Nifty opened the week at 10731, made a high of 10774, low of 10512 and closed the week at 10526. Thus the Nifty closed the week with a loss of 156 points.

 

On the daily charts, both Sensex and Nifty have formed a Three Black Crows formation which is a Bearish Reversal pattern. On the weekly chart, both the indices have formed a Bearish Engulfing pattern which is again a Bearish Reversal pattern. Thus daily as well as weekly candlestick pattern study suggests a Bearish bias.

 

The Indices are in a Trading Range between Sensex 35800-33300 and Nifty 10800-10000. The upper end of this Trading Range was tested unsuccessfully this week, and as a result the indices are moving lower. Immediate Support will be at the last intermediate bottom (10441) which is aided by Bullish Gap of Nifty 10440-10457.

 

If the market wants to climb higher then it needs to overcome this Strong Resistance Zone in the form of Bearish Gap between Sensex 35820-35911 and Nifty 10754-10843. This Gap is accompanied by the Nifty 200dma which makes it stronger and hence difficult to cross.

 

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 have managed a close above the short term average of 20dma (Sensex – 34823 and Nifty – 10482. Both the indices continue to remain below the medium term average of 50dma (Sensex – 35446 and Nifty – 10678) and even the long term average of 200dma (Sensex – 35390 and Nifty – 10745). Thus the trend in short term is still Bullish, whereas the trend in the medium term as well as the long term timeframe remains down.

 

MACD and Price ROC are both in Buy mode. RSI (48) suggests Bearish momentum. Stochastic Oscillator %K (62) is below %D and hence in Sell mode. ADX (17) suggests that the Down Trend has lost all its strength. Directional Indicators are in a Sell mode as +DI has gone below –DI. MFI (57) suggests Positive Money Flow. OBV is making lower top lower bottom formation. Thus majority of 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

10227

10341

10440

10526

10645

10774

10866

Sensex

33723

34225

34563

34981

35333

35605

35993


THIS WEEKS RECOMMENDATIONS:


STOCK

CMP

SL

Tgt-1

Tgt-2

Sell NiiTTech

1056

1075

1027

997

Sell CoaLIndia

257

262

249

241

Sell JsWSteeL

320

327

308

295

Sell Vedanta

200

205

192

184

Sell Hindalco

218

223

210

201


WATCH OUT FOR:

 

JSW 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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