Nifty bounced back from a low of 7422, just near the support area 7420-7441. The market breached the 7480-7441 level area but went back up indicating a false break. Thus increasing the significance of tee 7400-7420 support. The correction will resume once this support zone is breached. But the question mark still remains about the resumption of Uptrend as the Weekly Bearish Engulfing completed last week has still not been negated. This will get negated only if Nifty closes above 7808.
Nifty opened the week at 7469, made a high of 7685, low of 7422 and closed the week at 7663. Thus the Nifty closed the week with a gain of 204 points. Taking into consideration last two week's candlestick Nifty has completed a Bullish Harami on the weekly charts. But a Bullish Harami pattern should form at the bottom and not at the top of a trend; hence that cannot be the case here. So the follow up to the Bearish Engulfing which got completed a week before, was missing as this week formed a white body candle. Thus the bearish impact of the Bearish Engulfing will be negated only when Nifty closes above the top of this pattern which is 7808. Also both the indices formed a small white body candle on the daily charts in line with the ongoing pull-back. Thus Candlestick pattern study indicates turbulence in the short term.
Correction will resume only if Nifty closes below the level of 7420 for the rally 6628-7808. The relevant Fobonacci Retracement support levels are 7361-7223-7085. On a higher time frame i.e. rally from 5933 till 7808 the relevant Fobonacci Retracement support levels are7092-6871-6649. The 38.2% Retracement level of the immediate correction (7361-7808) and an intermediate bottom (7360) are forming a confluence zone. Thus 7360 will act as strong Support. A breach of this Support zone will turn the medium term trend down. On a higher scale, a very strong Support zone is formed between 7092-7067. This is a result of confluence of 38.2% Retracement of the bigger rally (7092), 61.8% Retracement of the immediate rally (7085) and the start of the intermediate Bullish Rising Gap (7067). The long term trend will continue to remain bullish as long as this Support zone is held.
Last week, Nifty completed a Bearish Rising Wedge pattern when Nifty closed below 7600. This is a leading Bearish Reversal pattern which suggests that the Nifty is now headed towards a target of 7180. This target is still intact and will remain valid till Nifty remains below 7808.
This week Nifty once again reclaimed the short term average of 20dma (7600). It still continues to remain above the medium term average of 50dma (7472) and the long term average of 200dma (6592). Thus the trend in the short term time frame has turned bullish, while that in the medium term and the long term time frame continues to remain up.
RSI @58 has moved above the equilibrium line and hence indicates bullish momentum. Stochastic Oscillator also continues in Buy mode as %K is above %D. The MFI @53 has also turned positive by moving above the centerline, suggesting positive money flow. OBV continues in Sell mode by forming lower top lower bottom formation. ADX has reduced to 30, indicating the uptrend is still intact but its strength has reduced. At the same time Directional Indicators continue to remain in Buy mode as +DI remains above –DI. Thus Oscillators are giving mixed signals; hence expect volatility in the short term.
Options data suggests that the market is expecting a trading range between 7500 and 7800. Friday saw strong buildup at 7700 Call which indicates strong resistance there.
Stock of The Week:
PetroNet LNG
The Stock has been consolidating in a symmetrical triangle for past 4 weeks. It has broken out on the daily charts with good volumes. The pattern target lies at 215 with the stop loss of 179 closing basis. The RSI has also closed above the 60% support level. For short term the target lies at 195.55-199.6-205.9 with the stop loss of 182
Nifty opened the week at 7469, made a high of 7685, low of 7422 and closed the week at 7663. Thus the Nifty closed the week with a gain of 204 points. Taking into consideration last two week's candlestick Nifty has completed a Bullish Harami on the weekly charts. But a Bullish Harami pattern should form at the bottom and not at the top of a trend; hence that cannot be the case here. So the follow up to the Bearish Engulfing which got completed a week before, was missing as this week formed a white body candle. Thus the bearish impact of the Bearish Engulfing will be negated only when Nifty closes above the top of this pattern which is 7808. Also both the indices formed a small white body candle on the daily charts in line with the ongoing pull-back. Thus Candlestick pattern study indicates turbulence in the short term.
Correction will resume only if Nifty closes below the level of 7420 for the rally 6628-7808. The relevant Fobonacci Retracement support levels are 7361-7223-7085. On a higher time frame i.e. rally from 5933 till 7808 the relevant Fobonacci Retracement support levels are7092-6871-6649. The 38.2% Retracement level of the immediate correction (7361-7808) and an intermediate bottom (7360) are forming a confluence zone. Thus 7360 will act as strong Support. A breach of this Support zone will turn the medium term trend down. On a higher scale, a very strong Support zone is formed between 7092-7067. This is a result of confluence of 38.2% Retracement of the bigger rally (7092), 61.8% Retracement of the immediate rally (7085) and the start of the intermediate Bullish Rising Gap (7067). The long term trend will continue to remain bullish as long as this Support zone is held.
Last week, Nifty completed a Bearish Rising Wedge pattern when Nifty closed below 7600. This is a leading Bearish Reversal pattern which suggests that the Nifty is now headed towards a target of 7180. This target is still intact and will remain valid till Nifty remains below 7808.
This week Nifty once again reclaimed the short term average of 20dma (7600). It still continues to remain above the medium term average of 50dma (7472) and the long term average of 200dma (6592). Thus the trend in the short term time frame has turned bullish, while that in the medium term and the long term time frame continues to remain up.
RSI @58 has moved above the equilibrium line and hence indicates bullish momentum. Stochastic Oscillator also continues in Buy mode as %K is above %D. The MFI @53 has also turned positive by moving above the centerline, suggesting positive money flow. OBV continues in Sell mode by forming lower top lower bottom formation. ADX has reduced to 30, indicating the uptrend is still intact but its strength has reduced. At the same time Directional Indicators continue to remain in Buy mode as +DI remains above –DI. Thus Oscillators are giving mixed signals; hence expect volatility in the short term.
Options data suggests that the market is expecting a trading range between 7500 and 7800. Friday saw strong buildup at 7700 Call which indicates strong resistance there.
Stock of The Week:
PetroNet LNG
The Stock has been consolidating in a symmetrical triangle for past 4 weeks. It has broken out on the daily charts with good volumes. The pattern target lies at 215 with the stop loss of 179 closing basis. The RSI has also closed above the 60% support level. For short term the target lies at 195.55-199.6-205.9 with the stop loss of 182
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