A truely volatile week ended in peace. The market took support in a strong confluence zone created by the gap 7936-7974 and trendline support created by recent bottoms. The market tested the 50DMA and has closeed just below the average. With the yearly closing of many foreign funds the market is likely to stay down. Any rise should be used to sell as both short and medium term has terned bearish. The uptrend will resume only after the 8375 is taken out successfully.
Nifty opened the week at 8160, made a high of 8263, low of 7961 and closed the week at 8225. Thus the Nifty closed the week with a minor gain of 1 point. On the daily charts, Nifty has formed a Bearish Doji which is a bearish reversal pattern requiring a confirmation. On the weekly charts it has formed a small white body candle with long lower shadow which combined with last weeks candle forms an ‘In-Neck’ pattern which is a bearish continuation pattern. A bearish candle as the next week’s formation will confirm continuation of bearishness. Hence both the daily as well as weekly candlestick patterns suggest bearishness to continue.
Currently the market is witnessing a pull-back in the on-going Correction. The Pull-back levels are 8215-8294-8375. Thus the Correction will be deemed complete only when Nifty closes above 8375. Till then one can expect the on-going fall to continue. A continuation of the downtrend will imply a correction of the rise from 5933. For this the intermediate Correction levels are placed at 7597-7280-6962. On a higher degree the entire rally has started from low of 5118 and the equivalent Correction levels are placed at 7286-6872-6458. A strong confluence zone exist between 7286-7280 which should act as strong support zone.
RSI @ 37 is well below the centerline suggesting bearish momentum. Stochastic Oscillator has turned into buy mode as %K (26) has gone above %D. Also the MFI has dropped further to 30 which suggest money flowing out. ADX has fallen to 30, 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 continues in Sell mode given in the previous week. Also the negative divergence observed in RSI seems to be playing out. Thus majority of the Oscillators are suggesting bearishness.
This week, Nifty tested the medium term average of 50dma (8235) and closed below it. Also Nifty continue to remain below the short term average of 20dma (8381). However, it continue to remain well above the long term average of 200dma (7551). Thus the trend in the short term and medium term timeframe has turned bearish whereas trend in the long term timeframe continues to remain up.
This week the Volatility Index saw a surge of around 35% to a level of 19 but closed the week lower. Option data suggest highest Put Open Interest has shifted to 8000 whereas the highest Call build-up is at the strike of 8500. Thus Option data suggests a trading range with support coming in at 8000 and resistance around 8500. On Friday there was a surge in Open Interest for the 8350 Call which will act as immediate resistance.
Stock of the Week:
Central Bank of India
The Stock has given breakout of an Inverted Head & Shoulders pattern on the weekly charts. The pattern target lies at 125.45 with the stop loss of 59. The RSI is also above the 60% indiacting bullish momentum. The stock can be bought at cmp 85.3 as well as on dips to 82.5 with the stop loss of 73 for the targets of 92.25-97.5-106.55-112.25.
Nifty opened the week at 8160, made a high of 8263, low of 7961 and closed the week at 8225. Thus the Nifty closed the week with a minor gain of 1 point. On the daily charts, Nifty has formed a Bearish Doji which is a bearish reversal pattern requiring a confirmation. On the weekly charts it has formed a small white body candle with long lower shadow which combined with last weeks candle forms an ‘In-Neck’ pattern which is a bearish continuation pattern. A bearish candle as the next week’s formation will confirm continuation of bearishness. Hence both the daily as well as weekly candlestick patterns suggest bearishness to continue.
Currently the market is witnessing a pull-back in the on-going Correction. The Pull-back levels are 8215-8294-8375. Thus the Correction will be deemed complete only when Nifty closes above 8375. Till then one can expect the on-going fall to continue. A continuation of the downtrend will imply a correction of the rise from 5933. For this the intermediate Correction levels are placed at 7597-7280-6962. On a higher degree the entire rally has started from low of 5118 and the equivalent Correction levels are placed at 7286-6872-6458. A strong confluence zone exist between 7286-7280 which should act as strong support zone.
RSI @ 37 is well below the centerline suggesting bearish momentum. Stochastic Oscillator has turned into buy mode as %K (26) has gone above %D. Also the MFI has dropped further to 30 which suggest money flowing out. ADX has fallen to 30, 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 continues in Sell mode given in the previous week. Also the negative divergence observed in RSI seems to be playing out. Thus majority of the Oscillators are suggesting bearishness.
This week, Nifty tested the medium term average of 50dma (8235) and closed below it. Also Nifty continue to remain below the short term average of 20dma (8381). However, it continue to remain well above the long term average of 200dma (7551). Thus the trend in the short term and medium term timeframe has turned bearish whereas trend in the long term timeframe continues to remain up.
This week the Volatility Index saw a surge of around 35% to a level of 19 but closed the week lower. Option data suggest highest Put Open Interest has shifted to 8000 whereas the highest Call build-up is at the strike of 8500. Thus Option data suggests a trading range with support coming in at 8000 and resistance around 8500. On Friday there was a surge in Open Interest for the 8350 Call which will act as immediate resistance.
Stock of the Week:
Central Bank of India
The Stock has given breakout of an Inverted Head & Shoulders pattern on the weekly charts. The pattern target lies at 125.45 with the stop loss of 59. The RSI is also above the 60% indiacting bullish momentum. The stock can be bought at cmp 85.3 as well as on dips to 82.5 with the stop loss of 73 for the targets of 92.25-97.5-106.55-112.25.
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