The market has give follow through bearish candle for last weeks bearish piercing. Once the previous swin low of 8429 was taken out, the market collapsed like tower of cards. The market has stopped just shy of the Strong support zone 8200-8180. The market had moved up almost vertically and hence some consolidation was required. Thus this Correction is not only a necessity currently, but it will be healthy for the overall well-being of the market. Strong trendline support is seen at the level of Nifty 8110, which if breached then we will need to check for the Correction levels of a higher degree.
Nifty opened the week at 8538, made a high of 8546, low of 8216 and closed the week at 8224. Thus the Nifty closed the week with a loss of 314 points. On the daily charts, the market has formed a big black body candle whereas on the weekly chart it has formed a big black body candle almost like a Closing Marubuzo. The market has formed Tweezer Top on both the daily as well as the weekly chart. This is a bearish reversal pattern. It will get negated only when Nifty closes above 8626. On the daily charts, the Tweezer top was followed by Three Black Crows formation. Thus daily as well as weekly charts suggest bearishness to continue in the near term.
Nifty 8100 is a critical level, not only it is a strong Trendline support level, but also a Bearish Rising Wedge pattern completion level. The market is likely to test the Support zone between 8200-8175 followed by the above mentioned Trendline support levels which is at 8110. Correction levels as per Fibonacci Retracement theory remains at 8281-8175-8068.
Nifty has closed below the short term average of 20dma (8452) but it has managed to stay just above the medium term average of 50dma (8216). But it continue to remain well above the long term average of 200dma (7500). Thus the trend in the short term timeframe has turned bearish whereas trend in the long term timeframe continues to remain up.
RSI has dropped below the 40% support line indicatin bearishneass. Stochastic Oscillator too continues in Sell mode as %K is below %D. MFI has fallen below the equilibrium line to 37 which suggest money flowing out. ADX has fallen to 29, which indicates that the uptrend has lost some of its strength. Direction Indicators too are in Sell mode as +DI has gone below –DI. Bollinger Band has given a Sell signal on Thursday when price closed below the lower Band. Majority of the Oscillators have turned bearish while RSI is exhibiting negative divergence.
Option data suggest highest Put Open Interest has shifted to 8100 whereas the highest Call build-up has shifted to the strike of 8500. Thus Option data suggests a trading range with support coming in at 8100 and resistance around 8500.
Stock of the Week:
Aditya Birla Nuvo
The Stock has been moving in rising channel since May 2014. It has now given breakdown of this channel on the weekly charts with good volume. The pattern target lies at 1415 with the stop loss of 1830. The Daily RSI has also moved below the 40% support level, indicatin bearishness. The Stock can be shorted at cmp and on rise till 1710 with the stop loss of 1750 on closingg basis for the targets of 1634-1577-1542
Nifty opened the week at 8538, made a high of 8546, low of 8216 and closed the week at 8224. Thus the Nifty closed the week with a loss of 314 points. On the daily charts, the market has formed a big black body candle whereas on the weekly chart it has formed a big black body candle almost like a Closing Marubuzo. The market has formed Tweezer Top on both the daily as well as the weekly chart. This is a bearish reversal pattern. It will get negated only when Nifty closes above 8626. On the daily charts, the Tweezer top was followed by Three Black Crows formation. Thus daily as well as weekly charts suggest bearishness to continue in the near term.
Nifty 8100 is a critical level, not only it is a strong Trendline support level, but also a Bearish Rising Wedge pattern completion level. The market is likely to test the Support zone between 8200-8175 followed by the above mentioned Trendline support levels which is at 8110. Correction levels as per Fibonacci Retracement theory remains at 8281-8175-8068.
Nifty has closed below the short term average of 20dma (8452) but it has managed to stay just above the medium term average of 50dma (8216). But it continue to remain well above the long term average of 200dma (7500). Thus the trend in the short term timeframe has turned bearish whereas trend in the long term timeframe continues to remain up.
RSI has dropped below the 40% support line indicatin bearishneass. Stochastic Oscillator too continues in Sell mode as %K is below %D. MFI has fallen below the equilibrium line to 37 which suggest money flowing out. ADX has fallen to 29, which indicates that the uptrend has lost some of its strength. Direction Indicators too are in Sell mode as +DI has gone below –DI. Bollinger Band has given a Sell signal on Thursday when price closed below the lower Band. Majority of the Oscillators have turned bearish while RSI is exhibiting negative divergence.
Option data suggest highest Put Open Interest has shifted to 8100 whereas the highest Call build-up has shifted to the strike of 8500. Thus Option data suggests a trading range with support coming in at 8100 and resistance around 8500.
Stock of the Week:
Aditya Birla Nuvo
The Stock has been moving in rising channel since May 2014. It has now given breakdown of this channel on the weekly charts with good volume. The pattern target lies at 1415 with the stop loss of 1830. The Daily RSI has also moved below the 40% support level, indicatin bearishness. The Stock can be shorted at cmp and on rise till 1710 with the stop loss of 1750 on closingg basis for the targets of 1634-1577-1542
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