The market closed at all time high with each day of the week and the 6690 target of Nifty was achived easily. The Bull market is in full form. As I had mentioned earlier about a Bullish Flag pattern, this chart is complete now and the potential target is 6915. The market is on the verge of a multi year breakout on the monthly charts. It can be termed as start of a much anticipated bull market. The euphoria associated with the bull market is missing with meager participation from Retail crowd. This one of the simplest and most important psychological trait of a new bull market.
Nifty opened the week at 6510, made a high of 6702, low of 6510 and closed the week at 6695. Thus the Nifty closed the week with a strong gain of 201 points. On the daily charts, Nifty have formed a big white body candle. On the weekly chart it has formed a big Opening White body Marubuzo which indicates that strong bullish momentum remains intact. Hence both daily as well as weekly charts suggest bullishness in the near term. The entire move from the lows of 4531 can be seen in a single channel on weekly charts. The upper end of channel at 6770 level will act as a strong resistance.
Pattern formation is a dynamic process. This week index has completed a Bullish Flag pattern when Nifty closed above 6562. The pattern has a potential target of at least 6915. These targets are likely to be achieved as long as Nifty remains above 6432.
The market has left behind a Bullish upward gap at 6413-6403. This Bullish Gap is acting as a strong support which was tested when Nifty reversed from a low of 6432. This Gap can be termed as Measuring Gap and as per Gap theory the target falls at 6880. Thus with various tools of technical analysis the potential target zone for Nifty lies at 6880-6915. This rally was started from the lows of 5933 and hence a breach of this level with signify end of this bull rally.
This market is above its short term average of 20dma (6498), the medium term average of 50dma (6284) and the long term average of 200dma (6034). Thus the trend in all the time frame remains bullish.
RSI @ 78 has reached overbought territory. MFI @ 56 has moved from near equilibrium level of 50 towards more bullish bias. A clear indication of money flowing into the market. Stochastic Oscillator is also in overbought zone as %K is at 91. ADX @ 36 has increased further, suggesting that the uptrend remains very strong. The Directional Indicators continue in Buy mode as +DI continues to remain above -DI. OBV continues in Buy mode making higher top higher bottom formation. Both the indices continue with Buy signal on Bollinger Band. Most of the Oscillators are in overbought territory, so in short term there can be some weakness in blue chips, so one can look towards buying the midcap stocks, where the rally is yet to reach its peak.
The Nifty O.I. PCR is at a level of 1.06 which points towards bullish bias prevailing in the market. For the April series, highest Open interest build up is seen at 6400 Put and 6700 Call. This suggests that the market expects a trading range of 6400 and 6700 levels. On Friday strong Call writing was witnessed at the strike of 7000 and some unwinding of the 6700 Call. Thus as long as Nifty stays above 6700 there is a strong chance of reaching the 7000 levels in this series.
Stock of the week:
RECL:
The stock has been in a consolidation since the June 2013 in the form of a triangle. The stock has broken out of the triangle on the weekly charts. A Inverted Head & Shoulders breakout can be seen in the daily charts. But the weekly charts has more significance. The potential target for this chart is around 325 levels. For the short term one can buy this stock for the target of 236-250 with the stop loss of 213.
Nifty opened the week at 6510, made a high of 6702, low of 6510 and closed the week at 6695. Thus the Nifty closed the week with a strong gain of 201 points. On the daily charts, Nifty have formed a big white body candle. On the weekly chart it has formed a big Opening White body Marubuzo which indicates that strong bullish momentum remains intact. Hence both daily as well as weekly charts suggest bullishness in the near term. The entire move from the lows of 4531 can be seen in a single channel on weekly charts. The upper end of channel at 6770 level will act as a strong resistance.
Pattern formation is a dynamic process. This week index has completed a Bullish Flag pattern when Nifty closed above 6562. The pattern has a potential target of at least 6915. These targets are likely to be achieved as long as Nifty remains above 6432.
The market has left behind a Bullish upward gap at 6413-6403. This Bullish Gap is acting as a strong support which was tested when Nifty reversed from a low of 6432. This Gap can be termed as Measuring Gap and as per Gap theory the target falls at 6880. Thus with various tools of technical analysis the potential target zone for Nifty lies at 6880-6915. This rally was started from the lows of 5933 and hence a breach of this level with signify end of this bull rally.
This market is above its short term average of 20dma (6498), the medium term average of 50dma (6284) and the long term average of 200dma (6034). Thus the trend in all the time frame remains bullish.
RSI @ 78 has reached overbought territory. MFI @ 56 has moved from near equilibrium level of 50 towards more bullish bias. A clear indication of money flowing into the market. Stochastic Oscillator is also in overbought zone as %K is at 91. ADX @ 36 has increased further, suggesting that the uptrend remains very strong. The Directional Indicators continue in Buy mode as +DI continues to remain above -DI. OBV continues in Buy mode making higher top higher bottom formation. Both the indices continue with Buy signal on Bollinger Band. Most of the Oscillators are in overbought territory, so in short term there can be some weakness in blue chips, so one can look towards buying the midcap stocks, where the rally is yet to reach its peak.
The Nifty O.I. PCR is at a level of 1.06 which points towards bullish bias prevailing in the market. For the April series, highest Open interest build up is seen at 6400 Put and 6700 Call. This suggests that the market expects a trading range of 6400 and 6700 levels. On Friday strong Call writing was witnessed at the strike of 7000 and some unwinding of the 6700 Call. Thus as long as Nifty stays above 6700 there is a strong chance of reaching the 7000 levels in this series.
Stock of the week:
RECL:
The stock has been in a consolidation since the June 2013 in the form of a triangle. The stock has broken out of the triangle on the weekly charts. A Inverted Head & Shoulders breakout can be seen in the daily charts. But the weekly charts has more significance. The potential target for this chart is around 325 levels. For the short term one can buy this stock for the target of 236-250 with the stop loss of 213.
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