This week the markets made new life time high of 7840. However it failed to hold on to these gains. The market is loosing its bullishness, conviction of market participants is missing. TCS became the first company to cross the 5 lakh crore market capitalization. Apart from IT the support came from defensive like pharma and consumer goods stocks. This is clear indication of a narrow breadth dictating the Nifty movement. The broader market especially mid-caps and small-caps will start catching up real soon with Blue Chips. This move points out couple of pattern failure. The Bearish Rising Wedge on the daily charts and Bearish Engulfing on the weekly charts have failed. A strong directional move is seen post pattern failure, as stop losses are triggered. But it is completely missing, indicating confusion among the Bullish & Bearish Camps.
Nifty opened the week at 7701, made a high of 7840, low of 7674 and closed the week at 7790. Thus the Nifty closed the week with a gain of 127 points. It has formed a small black body candle on the daily charts on Friday. On the weekly charts, Nifty has formed a real white body candle. The weekly Bearish Engulfing pattern got negated this week when Nifty closed the week above 7780. Thus Candlestick pattern study indicates uncertainty in the short term. The Bearish Rising Wedge pattern got negated, when Nifty Expired above 7808.It sure seems sign of broadening pattern formation in the near future, as pattern failure was not assisted by strong up move.
The 38.2% Retracement level of the immediate correction (7361) and an intermediate bottom (7360) are forming a confluence zone. Thus 7360 will act as strong Support zone. 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 higher 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.
This Nifty has continued to remain above the short term average of 20dma (7661), the medium term average of 50dma (7538) and the long term average of 200dma (6640). Thus the trend in the short term timeframe, medium term and long term timeframe continues to remain up.
RSI @63, indicating bullish momentum is intact. Stochastic Oscillator %K @93, despite being overbought, continues in Buy mode as it remains above %D. ADX continues to remain at 33, which suggests that the prevailing uptrend is still strong. The Directional Indicators continue in Buy mode as +DI remains above –DI. OBV remains sideways and hence does not confirm to the current upward price movement. MFI has dropped to the equilibrium line at 50, suggesting that the positive money flow is equal to negative money flow. If the price moves lower, then negative divergence of the second order will be confirmed for the RSI and MACD. Thus Oscillators are painting a mixed picture in the near term.
Option writing for the August month series suggests support coming in at 7700 and resistance at 8000. Friday saw strong Put writing at 7700 strike which indicates immediate support at that level.
Stock of the Week:
Lupin
The stock has made a life time high and has broken out of the consolidation for the past 3 weeks. The stock can be bought with the stop loss of 1005 for the target of 1149-1167-1192.
Nifty opened the week at 7701, made a high of 7840, low of 7674 and closed the week at 7790. Thus the Nifty closed the week with a gain of 127 points. It has formed a small black body candle on the daily charts on Friday. On the weekly charts, Nifty has formed a real white body candle. The weekly Bearish Engulfing pattern got negated this week when Nifty closed the week above 7780. Thus Candlestick pattern study indicates uncertainty in the short term. The Bearish Rising Wedge pattern got negated, when Nifty Expired above 7808.It sure seems sign of broadening pattern formation in the near future, as pattern failure was not assisted by strong up move.
The 38.2% Retracement level of the immediate correction (7361) and an intermediate bottom (7360) are forming a confluence zone. Thus 7360 will act as strong Support zone. 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 higher 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.
This Nifty has continued to remain above the short term average of 20dma (7661), the medium term average of 50dma (7538) and the long term average of 200dma (6640). Thus the trend in the short term timeframe, medium term and long term timeframe continues to remain up.
RSI @63, indicating bullish momentum is intact. Stochastic Oscillator %K @93, despite being overbought, continues in Buy mode as it remains above %D. ADX continues to remain at 33, which suggests that the prevailing uptrend is still strong. The Directional Indicators continue in Buy mode as +DI remains above –DI. OBV remains sideways and hence does not confirm to the current upward price movement. MFI has dropped to the equilibrium line at 50, suggesting that the positive money flow is equal to negative money flow. If the price moves lower, then negative divergence of the second order will be confirmed for the RSI and MACD. Thus Oscillators are painting a mixed picture in the near term.
Option writing for the August month series suggests support coming in at 7700 and resistance at 8000. Friday saw strong Put writing at 7700 strike which indicates immediate support at that level.
Stock of the Week:
Lupin
All Targets achieved high of 1210 on 31st August 2014
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