The market stayed sideways for the entire week, trading in the range of 8500-8630. This looks like a rest period for the market before further move up. On weekly charts the market has formed Bearish piercing on above average volume. But a confirmation in the form of a big black body candle or atleast the breach of 8425 is necessary.
Nifty opened the week at 8605, made a high of 8626, low of 8504 and closed the week at 8538. Thus the Nifty closed the week with a loss of 50 points. On the daily charts, it has formed a black body candle but it is not a bearish formation. Interestingly, all the five candle bodies this week are Inside Candles i.e. within the trading range of the candle formed on last Friday; which simply shows that the entire week was like a rest week. On the weekly chart, Nifty has formed a black body candle which in this case is a bullish continuation pattern. Thus the daily and weekly candlestick study does not suggest any bearishness.
Nifty continue to hover around the critical Rising Trendline. Minor profit booking was observed after reaching near the immediate target of 8656 respectively, which is as per Gap theory. Above which one can expect both the indices to move towards intermediate rally target (golden ratio) which is at 8893. Short term Correction will start only when Nifty closes below the level of 8429. In such a case the Correction levels will be at 8281-8175-8068. The first bullish Rising Gap between 8198-8181 is coinciding with the 50% Correction level mentioned above and hence a strong Support zone is formed between 8198-8175.
Nifty continues to remain above the short term average of 20dma (8461), medium term average of 50dma (8191) and even above the long term average of 200dma (7443). Thus the trend in the short term, medium term and the long term time frame continues to remain bullish.
RSI has dropped slightly to 63 but it still suggests bullish momentum. The Stochastic oscillator has given a Sell signal as %K (71) has gone below the signal line %D. Also the MFI has fallen to 56 but it still suggests positive money flow in the market. ADX has further increased to 36, which indicates that the uptrend is getting stronger. Direction Indicators continue in buy mode as +DI remains above –DI. Bollinger Band continues in Buy mode. Except for certain Oscillators which are overbought and are exhibiting negative divergence of the first order, majority of them are suggesting bullishness in the short term.
Option data suggest highest Put Open Interest is at the strike of 8500 and highest Call build-up is at the strike of 8600. Thus Option data suggests a very narrow trading range with support coming in at 8500 and resistance around 8600.
Stock of the Week:
Hind Zinc Ltd.
The has been consolidating in the form of a Symmetrical triangle for the past six months after hitting the high of 184. It has broken the consolidation with good volumes on the weekly charts. The pattern target lies at 209 with the stop loss of 162. For the short term the stock can be bought for the targets of 187-192-196-200 with the stop loss of 167.
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