The week saw volatile market instead of a single side movement. The first half of week bears dominated the market. However the Bulls white washed bears in the last 2 days. The market fell below the psychologically crucial level of 8000, but bounced sharply to close above 8100. The mid-cap and small-cap lost 1.5% & 0.9% respectively. This has put short breaks to the frenzied rally in the market. This helps to fill wind in the sails so that there will be smooth sailing of the boat. A sharp increase in volatility at higher levels may result in the formation of an intermediate top.
Nifty opened the week at 8070, made a high of 8160, low of 7925 and closed the week at 8121. Thus the Nifty closed the week with a gain of 16 points. This week, the index has formed a small white body candle with a long lower shadow. Long lower shadow indicates buying at lower levels. A bearish black body candle on the weekly charts would have resulted in a bearish reversal as the previous week had formed a black body Spinning Top. On the daily charts, the index has formed a small Spinning Top which is again a neutral formation. Hence candle formation on Monday will hold significance as it will determine the path ahead.
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. 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.
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 have tested the short term average of 20dma (8041) and managed to hold above it on weekly closing basis. Also both the index continue to remain above the medium term average of 50dma (7836) and also above the long term average of 200dma (6968). Thus the trend in the short term, medium term and long term continues to remain bullish.
RSI is strong at 59, suggesting bullish momentum. ADX has decreased to a level of 29 but still suggests that the positive uptrend has strength. Directional Indicators continue in Buy mode as +DI is above –DI. OBV continues to move sideways after giving a Buy signal. MFI has reduced to 46 which suggest negative money flow in the market. Thus Oscillators are showing a mixed bias.
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 8200. Thus Option data analysis indicates a short term trading range with support coming in at 8000 and resistance around 8200. Friday saw heavy Call writing at the strike of 8200 which indicates that the Nifty will find strong resistance at the level of 8200.
Stock of the Week:
Tech Mahidra:
The stock has been in sideways move after hitting life time high of 2523.2. It has given flag pole breakout on the daily charts. The pattern target lies at 2790 with the stop loss of 2400. For short term buy the stock with the 2420 stop loss and target of 2515-2540-2559-2625.
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. 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.
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 have tested the short term average of 20dma (8041) and managed to hold above it on weekly closing basis. Also both the index continue to remain above the medium term average of 50dma (7836) and also above the long term average of 200dma (6968). Thus the trend in the short term, medium term and long term continues to remain bullish.
RSI is strong at 59, suggesting bullish momentum. ADX has decreased to a level of 29 but still suggests that the positive uptrend has strength. Directional Indicators continue in Buy mode as +DI is above –DI. OBV continues to move sideways after giving a Buy signal. MFI has reduced to 46 which suggest negative money flow in the market. Thus Oscillators are showing a mixed bias.
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 8200. Thus Option data analysis indicates a short term trading range with support coming in at 8000 and resistance around 8200. Friday saw heavy Call writing at the strike of 8200 which indicates that the Nifty will find strong resistance at the level of 8200.
Stock of the Week:
Tech Mahidra:
The stock has been in sideways move after hitting life time high of 2523.2. It has given flag pole breakout on the daily charts. The pattern target lies at 2790 with the stop loss of 2400. For short term buy the stock with the 2420 stop loss and target of 2515-2540-2559-2625.
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