The market is slowly inchin upwards. It is moving like a frog which jump 3 steps up and comes 2 steps down. From my point of view the market is waiting for the laggards to catch up. This makes the case for a strong bull market. The market stayed above the key psycholoical level of 8000 this week. This week while the major indices closed flat, the mid-cap and small-cap indices went up by nearly 3%.
Nifty opened the week at 8132, made a high of 8180, low of 8057 and closed the week at 8105. Thus the Nifty closed the week with a gain of 19 points. Weekly chart has seen a small Black body Spinning Top which is a indecisive formation. In this case it indicates uncertainty regarding the continuation of weekly Uptrend. A black body candle if formed next week will confirm bearishness on the weekly timeframe. On the daily charts, a small white body formation has occurred on Friday. A possible Bullish Harami case is lost due to sideways market movement.
The market registered a weekly gap last week between 7984-7968. This gap will not only act as a strong support but it is also a Measuring gap. Thus, according to Gap theory, the immediate target for the current rally falls at 8412. A weekly close below 7968 will reverse the short term trend.
The market is constantly making higher top higher bottom formations and the medium term trend is likely to reverse if the Nifty closes below 7540. A breach of this support is likely to test the Support zone between 7441-7394 which is due to a confluence of the 61.8% correction level with intermittent bottoms at 7441 & 7422.
The market has already achieved the Rounding bottom target of 8145. Now it is headed towards next target which is Flag pattern target, which got completed when Nifty closed above 7922. The target for this pattern is at 8304. The targets will be achieved as long as Nifty remains above 7855.
On a higher scale, a very strong Support zone is formed between 7112-7067. This is a result of confluence of 38.2% Retracement of the higher 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 stayed above the short term average of 20dma (7998) as well as the medium term average of 50dma (7804). Both the indices continue to remain well above the long term average of 200dma (6919). Thus the trend in the short term, medium term and long term continues to remain bullish.
RSI is strong at 63, suggesting bullish momentum. ADX has increased further to 35 indicating that the uptrend is getting stronger. Directional Indicators continue in Buy mode as +DI is above –DI. OBV has moved lower but is yet to give a Sell signal. MFI has reduced to 54 but still suggests positive money flow in the market. Thus Oscillators are suggesting a bullish bias in the near term.
Option data suggests that highest Put Open Interest build-up is at the strike of 8000 and highest Call build-up is at the strike of 8300. Thus Option data analysis indicates a short term trading range with support at 8000 and resistance around 8300. Friday saw heavy Put writing at the strike of 8100 which indicates that the Nifty will find support at the level of 8100.
Stock of the Week:
Praj Industries
The Stock has given breakout of the Inverted Head & shoulders pattern on the daily charts with huge volume. The pattern target lies at 79.55 with the stop loss 63.45. of The stock can be bought for the targets of 69.65-70.4-74.14 with the stop loss of 65.45.
Nifty opened the week at 8132, made a high of 8180, low of 8057 and closed the week at 8105. Thus the Nifty closed the week with a gain of 19 points. Weekly chart has seen a small Black body Spinning Top which is a indecisive formation. In this case it indicates uncertainty regarding the continuation of weekly Uptrend. A black body candle if formed next week will confirm bearishness on the weekly timeframe. On the daily charts, a small white body formation has occurred on Friday. A possible Bullish Harami case is lost due to sideways market movement.
The market registered a weekly gap last week between 7984-7968. This gap will not only act as a strong support but it is also a Measuring gap. Thus, according to Gap theory, the immediate target for the current rally falls at 8412. A weekly close below 7968 will reverse the short term trend.
The market is constantly making higher top higher bottom formations and the medium term trend is likely to reverse if the Nifty closes below 7540. A breach of this support is likely to test the Support zone between 7441-7394 which is due to a confluence of the 61.8% correction level with intermittent bottoms at 7441 & 7422.
The market has already achieved the Rounding bottom target of 8145. Now it is headed towards next target which is Flag pattern target, which got completed when Nifty closed above 7922. The target for this pattern is at 8304. The targets will be achieved as long as Nifty remains above 7855.
On a higher scale, a very strong Support zone is formed between 7112-7067. This is a result of confluence of 38.2% Retracement of the higher 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 stayed above the short term average of 20dma (7998) as well as the medium term average of 50dma (7804). Both the indices continue to remain well above the long term average of 200dma (6919). Thus the trend in the short term, medium term and long term continues to remain bullish.
RSI is strong at 63, suggesting bullish momentum. ADX has increased further to 35 indicating that the uptrend is getting stronger. Directional Indicators continue in Buy mode as +DI is above –DI. OBV has moved lower but is yet to give a Sell signal. MFI has reduced to 54 but still suggests positive money flow in the market. Thus Oscillators are suggesting a bullish bias in the near term.
Option data suggests that highest Put Open Interest build-up is at the strike of 8000 and highest Call build-up is at the strike of 8300. Thus Option data analysis indicates a short term trading range with support at 8000 and resistance around 8300. Friday saw heavy Put writing at the strike of 8100 which indicates that the Nifty will find support at the level of 8100.
Stock of the Week:
Praj Industries
The Stock has given breakout of the Inverted Head & shoulders pattern on the daily charts with huge volume. The pattern target lies at 79.55 with the stop loss 63.45. of The stock can be bought for the targets of 69.65-70.4-74.14 with the stop loss of 65.45.
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