This entire week the market stayed in the tight range. The market mostly traded with the negative bias. The loner the market stays in the range of 7600-7480. The support zone of 7500-7480 was tested successfully multiple times during the week. A breach of this zone will start the market correction. At the start of the week the easing tension in Middle East saw markets rise, but the markets failed to solidify on these gains.
Nifty opened the week at 7514, made a high of 7593, low of 7441 and closed the week at 7508. Thus the Nifty closed the week with a minor loss of 3 points. This in itself imbibes the indecisive nature of the market. On Friday, Nifty formed a small black body candle forming a Harami Cross. This pattern formed in a sideways consolidation phase, does have only meager significance. On the weekly chart Nifty has formed a Doji formation which can still be a part of the Mat Hold pattern. Thus daily as well as weekly formations point towards consolidation with a bearish bias in the near term. On short term timeframe, this implies a Correction of the immediate rise from 7118 to 7700 and the corresponding supports are at 7477-7409-7340.
The market is continuing its Time correction, which is essentially a price move post the strong Parabolic price rise. The market is corrected from near the price target of the daily well as weekly Flag pattern target which was at 7705. While moving higher the market has left behind two Bullish Rising Gaps out of which the first between 7497-7484 is already acting as a strong Support by supporting the market for the entire last week. The fact that, this gap coincides with the 38.2% Retracement of the immediate price move from7118-7700.
If & when this above mentioned Support zone is breached, the price correction is expected to intensify. The markets will test the second Bullish Rising Gap between 7067-7020. This gap coincides with 61.8% Retracement level at 7044 of Nifty move from 6638 to 7700. A breach of this will reverse the current rally.
When the market overcame the previous top and made fresh lifetime highs, it marked the end of six year consolidation. On the weekly charts Nifty has completed a Bullish Saucer formation and the targets as per that will fall at 8145 which are likely to be achieved within a period of next 20 months.
Nifty has just closed below the short term average of 20dma (7539). But they are still above the medium term average of 50dma (7208) and the long term average of 200dma (6461). Thus the trend in the short term has turned bearish but that in the medium term and the long term timeframe continues to remain bullish.
RSI has reduced to 56 suggesting a reduction in bullish momentum. Besides it also exhibits negative divergence of the first order. Stochastic Oscillator continues in Sell mode as %K is below %D. MFI has reduced dramatically to 29, suggesting that money flow out of the market. OBV has started making lower top, lower bottom formation. The Directional Indicators continue in Buy mode as +DI is above –DI but they are converging. The Buy signal on Bollinger Band was negated this week when both the indices closed below the mean of Bollinger Band. ADX has dropped slightly and is now at a level of 45 which suggests that the strength of the current uptrend is very high but the trend has now matured. Hence Oscillator analysis suggests remaining cautious as some correction in the current uptrend can be expected.
Highest Call writing is seen at the strike of 8000 and highest Put writing is at the strike of 7000. With the budet being tabled during this month, the market is expecting a very big range between 7000 and 8000. Friday saw strong buildup at 7600 Call and 7300 Put suggesting a short term trading range between 7600 and 7300.
Stock of the Week:
ICICIBANK
The stock has been in consolidating after making the life time high of 1593. It has broken a falling channel which has strong bearish implication, Also the Stock price has closed below the 50DMA for the first time since March 2014. The RSI is also moved below the 40% level. Overall the stock is bearish in nature. The stock can be shorted with the stop loss of 1445 for the target of 1290. For short term the stock can be shorted with the stop loss of 1407 closing basis for the target of 1352-1325-1305.
Nifty opened the week at 7514, made a high of 7593, low of 7441 and closed the week at 7508. Thus the Nifty closed the week with a minor loss of 3 points. This in itself imbibes the indecisive nature of the market. On Friday, Nifty formed a small black body candle forming a Harami Cross. This pattern formed in a sideways consolidation phase, does have only meager significance. On the weekly chart Nifty has formed a Doji formation which can still be a part of the Mat Hold pattern. Thus daily as well as weekly formations point towards consolidation with a bearish bias in the near term. On short term timeframe, this implies a Correction of the immediate rise from 7118 to 7700 and the corresponding supports are at 7477-7409-7340.
The market is continuing its Time correction, which is essentially a price move post the strong Parabolic price rise. The market is corrected from near the price target of the daily well as weekly Flag pattern target which was at 7705. While moving higher the market has left behind two Bullish Rising Gaps out of which the first between 7497-7484 is already acting as a strong Support by supporting the market for the entire last week. The fact that, this gap coincides with the 38.2% Retracement of the immediate price move from7118-7700.
If & when this above mentioned Support zone is breached, the price correction is expected to intensify. The markets will test the second Bullish Rising Gap between 7067-7020. This gap coincides with 61.8% Retracement level at 7044 of Nifty move from 6638 to 7700. A breach of this will reverse the current rally.
When the market overcame the previous top and made fresh lifetime highs, it marked the end of six year consolidation. On the weekly charts Nifty has completed a Bullish Saucer formation and the targets as per that will fall at 8145 which are likely to be achieved within a period of next 20 months.
Nifty has just closed below the short term average of 20dma (7539). But they are still above the medium term average of 50dma (7208) and the long term average of 200dma (6461). Thus the trend in the short term has turned bearish but that in the medium term and the long term timeframe continues to remain bullish.
RSI has reduced to 56 suggesting a reduction in bullish momentum. Besides it also exhibits negative divergence of the first order. Stochastic Oscillator continues in Sell mode as %K is below %D. MFI has reduced dramatically to 29, suggesting that money flow out of the market. OBV has started making lower top, lower bottom formation. The Directional Indicators continue in Buy mode as +DI is above –DI but they are converging. The Buy signal on Bollinger Band was negated this week when both the indices closed below the mean of Bollinger Band. ADX has dropped slightly and is now at a level of 45 which suggests that the strength of the current uptrend is very high but the trend has now matured. Hence Oscillator analysis suggests remaining cautious as some correction in the current uptrend can be expected.
Highest Call writing is seen at the strike of 8000 and highest Put writing is at the strike of 7000. With the budet being tabled during this month, the market is expecting a very big range between 7000 and 8000. Friday saw strong buildup at 7600 Call and 7300 Put suggesting a short term trading range between 7600 and 7300.
Stock of the Week:
ICICIBANK
The stock has been in consolidating after making the life time high of 1593. It has broken a falling channel which has strong bearish implication, Also the Stock price has closed below the 50DMA for the first time since March 2014. The RSI is also moved below the 40% level. Overall the stock is bearish in nature. The stock can be shorted with the stop loss of 1445 for the target of 1290. For short term the stock can be shorted with the stop loss of 1407 closing basis for the target of 1352-1325-1305.
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