The market had been falling steadily for the past week. The market went below its 50DMA support but baounced back sharply on Friday. The international Rating agency S&P upgraded India Outlook to Stable from Negative on the back of improved political setting and a more conducive environment for economic reforms, thus providing a boost to growth prospects and improved fiscal management. This helped Bulls to make a roaring comeback in last hour of Friday's session. The market has taken support at the lower trendline of the rising channel as shown below.
Nifty opened the week at 8084, made a high of 8159, low of 7841 and closed the week at 7968. Thus the Nifty closed the week with a loss of 153 points. Nifty rebounded sharply in the last one hour of trade witnessing an increase of more than 100 points from the lows of the day and in the process snapping a three day fall. But still it failed to register a Bullish Reversal candlestick pattern on the daily charts. Nifty has made a white body candle almost like Thrusting which is a bearish continuation pattern. On the weekly charts it has formed a black body candle with long shadows. Thus both daily and weekly candlestick pattern suggests continuation of bearishness in the short term.
The weekly gap between 7984-7968 got filled this week and hence the target of 8412 as per gap theory, stands negated. On the lower side, there exists a critical Bullish Rising gap on the daily charts between 7598-7592 which aided by an intermediate bottom (7540) and 38.2% Retracement of the intermediate rally (7591), forms a strong confluence zone. Thus this confluence zone formed between 7598-7540 will act as Support Zone.
In the short term, the markets are correcting the upward rally from an immediate low of 7540 to a high of 8180 and the relevant Correction levels are at 7935-7860-7784. This week the markets have taken support at the 50% Retracement level and rebounded. The short term trend for the market is already down but the medium term trend is likely to reverse if the Nifty closes below 7540. The market has already achieved the Rounding bottom target of 8145. Now it is headed towards next target which is Flag pattern target. The target for this pattern is at 8304. The targets will be achieved as long as the Nifty remains above 7855.
This week, Nifty has managed to test and take support at the medium term average of 50dma (7885). Whereas both the indices continued to remain below the short term average of 20dma (8062) and remain well above the long term average of 200dma (7013). Thus the trend in the short term remains down, whereas the trend in the medium term and long term timeframe continues to remain bullish.
RSI is below the equilibrium line suggesting bearish momentum. MFI has reduced further to 28, suggesting money flowing out. ADX has reduced to 24, suggesting a decrease in the strength of uptrend. Directional Indicators are now in Sell mode as +DI has gone below –DI. OBV has moved lower but is still in sideways mode. Bollinger band has given a Sell signal on Thursday when the Nifty closed below the lower Bollinger band. Thus Oscillators are suggesting a bearish bias in the near term.
Option data suggests that highest Put Open Interest build-up is at the strike of 7800 and highest Call build-up has shifted to the strike of 8200. Thus Option data suggests a short term trading range with support coming in at 7800 and resistance around 8200.
Stock of The Week:
HDFC BANK
The stock has been in a range for past two weeks. It has now broken out of the consolidation. The pattern target lies at 920 with the stop loss of 855. For short term the stock can be bought with the stop loss of 861 for the targets of 885-892-900.
No comments:
Post a Comment