Once again the Middle East is unstable, because of the West. The President of U.S. authorized an air stike in Iraq to defate the rebels. As expeceted the tension kicked the Crude And US dollar prizes higher. The markets opened gap down below the important support of 7600 i.e. 50DMA. This can be treated as Breakaway gap, indicating increased momentum in the underlying currection.
Nifty opened the week at 7639, made a high of 7752, low of 7540 and closed the week at 7568. Thus the Nifty closed the week with a loss of 32 points. Nifty has formed a black body candle with a small lower shadow, after a gap down opening on Friday. On the weekly chart it has formed a black body candle with slightly long upper shadow. Thus both daily as well as weekly candlestick pattern suggests bearishness in the near term.
This week the index completed a Bearish Rising Channel formation. The target as per this pattern breakout will be atleast 7157 to 7044 for the Nifty. These targets are likely to be achieved as long as Nifty stays below 7752. Nifty opened with a gap down on Friday and continued to fall. In the process a Bearish Breakaway Gap has been registered between 7592-7630. This gap is aided by the presence of 50dma (7608) within and hence this gap will act as strong Resistance.
Market has once again resumed its correction and the immediate correction levels are placed at 7564-7479-7394. The 61.8% correction level forms a confluence zone with intermittent bottoms at 7441 & 7422. Thus this confluence zone between 7441-7394 will act as strong Support zone for the market. On a bigger time frame, a very strong Support zone is formed between 7112-7067. This is a result of confluence of 38.2% Retracement of the bigger rally (7112), 61.8% Retracement of the immediate rally (7097) 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 week Nifty has closed below the short term average of 20dma (7671) and the medium term average of 50dma (7608). But both the indices still continue to remain above the long term average of 200dma (6712). Thus the trend in the short term and medium term timeframe has turned down whereas the trend in the long term timeframe continues to remain up.
RSI @44 is below the equilibrium line and hence indicates bearish momentum. Stochastic Oscillator %K @20 continues in Sell mode as it remains below %D. ADX has dropped further to 25, which suggests a weakening of the current uptrend. The Directional Indicators have given a fresh Sell signal on Friday as -DI has gone above +DI. OBV remains sideways and hence does not confirm to the current price movement. MACD continues in Sell mode despite being in positive territory. RSI and MACD have shown confirmation of negative divergence of the second order. Thus Oscillators are suggesting bearish bias in the near term.
Option writing support coming in at 7300 and resistance at 8000. Friday saw strong Call writing at 7700 strike and Put writing at 7500 strike which indicates immediate resistance at 7700 and immediate support at 7500.
Stock of the week:
Reliance Infra-cmp 716.6
The stock has been moving in a sideways consolidation in the form of symmetrical triangle. It has given a break down on the daily charts after 2 month consolidation on good volume. The RSI has also moved below 40% confirming the sell signal. The pattern target is at 580 with the stop loss of 750.
The stock can be shorted for the week with the stop loss of 725 closing basis for the target of 674-655-633.
Nifty opened the week at 7639, made a high of 7752, low of 7540 and closed the week at 7568. Thus the Nifty closed the week with a loss of 32 points. Nifty has formed a black body candle with a small lower shadow, after a gap down opening on Friday. On the weekly chart it has formed a black body candle with slightly long upper shadow. Thus both daily as well as weekly candlestick pattern suggests bearishness in the near term.
This week the index completed a Bearish Rising Channel formation. The target as per this pattern breakout will be atleast 7157 to 7044 for the Nifty. These targets are likely to be achieved as long as Nifty stays below 7752. Nifty opened with a gap down on Friday and continued to fall. In the process a Bearish Breakaway Gap has been registered between 7592-7630. This gap is aided by the presence of 50dma (7608) within and hence this gap will act as strong Resistance.
Market has once again resumed its correction and the immediate correction levels are placed at 7564-7479-7394. The 61.8% correction level forms a confluence zone with intermittent bottoms at 7441 & 7422. Thus this confluence zone between 7441-7394 will act as strong Support zone for the market. On a bigger time frame, a very strong Support zone is formed between 7112-7067. This is a result of confluence of 38.2% Retracement of the bigger rally (7112), 61.8% Retracement of the immediate rally (7097) 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 week Nifty has closed below the short term average of 20dma (7671) and the medium term average of 50dma (7608). But both the indices still continue to remain above the long term average of 200dma (6712). Thus the trend in the short term and medium term timeframe has turned down whereas the trend in the long term timeframe continues to remain up.
RSI @44 is below the equilibrium line and hence indicates bearish momentum. Stochastic Oscillator %K @20 continues in Sell mode as it remains below %D. ADX has dropped further to 25, which suggests a weakening of the current uptrend. The Directional Indicators have given a fresh Sell signal on Friday as -DI has gone above +DI. OBV remains sideways and hence does not confirm to the current price movement. MACD continues in Sell mode despite being in positive territory. RSI and MACD have shown confirmation of negative divergence of the second order. Thus Oscillators are suggesting bearish bias in the near term.
Option writing support coming in at 7300 and resistance at 8000. Friday saw strong Call writing at 7700 strike and Put writing at 7500 strike which indicates immediate resistance at 7700 and immediate support at 7500.
Stock of the week:
Reliance Infra-cmp 716.6
The stock has been moving in a sideways consolidation in the form of symmetrical triangle. It has given a break down on the daily charts after 2 month consolidation on good volume. The RSI has also moved below 40% confirming the sell signal. The pattern target is at 580 with the stop loss of 750.
The stock can be shorted for the week with the stop loss of 725 closing basis for the target of 674-655-633.
Low of the week at 692
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