Archives : CRITICAL WEEK AHEAD - 07/12/2018.

CRITICAL WEEK AHEAD - 07/12/2018.

 

NEED TO STAY ABOVE 200DMA.

 

The market is delicately poised for the coming week, awaiting the five State Election results. The week ahead will reflect the future direction that the Market will take. Currently, the Nifty is in between a Bearish Gap 10722-10747 (200dma @ 10750) on the upside and Trendline Support at 10550. Positive outcome in favour of the ruling party is likely to take the Nifty past 200dma and then target the Trend Reversal level of 11089, and a setback is likely to test the higher bottom support of 10500. If this Support is taken out, then the Nifty is likely to test lower levels possibly towards 10200 mark.

 


CRITICAL WEEK AHEAD - 07/12/2018.

 

NEED TO STAY ABOVE 200DMA.

 

The market is delicately poised for the coming week, awaiting the five State Election results. The week ahead will reflect the future direction that the Market will take. Currently, the Nifty is in between a Bearish Gap 10722-10747 (200dma @ 10750) on the upside and Trendline Support at 10550. Positive outcome in favour of the ruling party is likely to take the Nifty past 200dma and then target the Trend Reversal level of 11089, and a setback is likely to test the higher bottom support of 10500. If this Support is taken out, then the Nifty is likely to test lower levels possibly towards 10200 mark.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 36396, made a high of 36446, low of 35266 and closed the week at 35673. Thus it closed the week with a loss of 521 points. At the same time the Nifty opened the week at 10930, made a high of 10941, low of 10588 and closed the week at 10693. Thus the Nifty closed the week with a loss of 183 points.

 

On the daily charts, both Sensex and Nifty have formed a Bullish Harami, which is a Bullish Reversal pattern which requires confirmation. On the weekly chart, Nifty has formed a Dark Cloud Cover whereas Sensex has fallen short of forming that pattern. Thus daily candlestick pattern is suggesting a moderate bullish bias whereas weekly candlestick pattern does not infuse much confidence.

 

The fall in the indices created a Bearish Gap between Sensex 35707-35777 and Nifty 10722-10747. This Gap along with Nifty 200dma (10750) is likely to act as strong Resistance. Also the Bearish Gap has led to a Bearish Island Reversal getting completed. Thus it has resulted in a Sell signal. The failure point for the Island Reversal will be the top i.e. Sensex 36446 and Nifty 10941.

 

The Indices are trading within well defined boundaries; the upper boundary created by the Bearish Gap between Sensex 35707-35777 and Nifty 10722-10747 along with Nifty 200dma (10750). The lower boundary is at Sensex 35000 and Nifty 10500. If the indices stay above the upper boundary, indices are likely to test the Trend Reversal level of Sensex 36813 and Nifty 11089. If the indices break the lower boundary, Nifty is likely to test the Support of 10200.

 

A fall below the Support of Nifty 10450, will see the Correction resuming and the 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 tested the long term average of 200dma (Sensex – 35447 and Nifty – 10750), but only Sensex could manage a close above that whereas Nifty could not. Both the indices also tested the short term average of 20dma (Sensex – 35530 and Nifty – 10684) and closed above that. Both the indices continue to remain above the medium term average of 20dma (Sensex – 35117 and Nifty – 10567). Thus the trend in long term is down, whereas the trend in the medium term and even the short term is still Up.

 

MACD and Price ROC are both in Buy mode. RSI (51) still suggests Bullish momentum. Stochastic Oscillator %K (44) is below %D and hence in Sell mode. ADX (15) suggests that a sideways trend. Directional Indicators are in a Sell mode as +DI is below –DI. MFI (60) still suggests Positive Money Flow. Buy signal in Bollinger Band has been negated. Thus Oscillators are suggesting a mixed bias.

 

Options data for December 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

10380

10489

10588

10693

10774

10866

10941

Sensex

34563

34896

35333

35673

35993

36446

36747

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy HeroMoto

3066

3017

3141

3217

Buy Dr.Reddy

2692

2652

2751

2813

Buy HUL

1824

1788

1878

1933

Buy Bata

1059

1038

1091

1124

Buy D-Mart

1513

1488

1551

1590


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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