There was a huge reversal seen in this week. The market touched the target zone 8890-9005 and faltered big time. It looks like Obama took all the Indain market gains with him. The market did neither spare the bulls nor bears. Both groups bled on the Dalal street as market lost all gains of last three days in single black Friday. As the market has repected the upper trendline of the Broadning pattern, the logical step would be market correction. But the main question now is whether it is a Trend Reversal or another sharp Correction.
Nifty opened the week at 8871, made a high of 8996, low of 8775 and closed the week at 8808. Thus the Nifty closed the week with a loss of 27 points. On the daily charts, Nifty formed a big Opening Black body Marubuzo which completely engulfed previous four days candle. This resulted in Bearish Engulfing pattern on the daily charts. On the weekly chart, it has formed a small black body candle with a longer upper shadow. The upper shadow indicates selling seen at higher levels. Thus daily candlestick pattern points towards bearishness in the near term whereas the weekly study is less bearish than the daily study.
On the monthly chart, Nifty have registered a candlestick pattern which is like Bullish Engulfing pattern. But it is actually termed as the Double Lovers Suicide pattern which is a bearish pattern. It requires a confirmation in the form of a black body candle in the next month. But if the February month candle closes above the high of this pattern i.e. above 8996 then the above pattern will stand negated.
As mentioned last week, the target levels 8893-9030 were expected to provide resistance to the index in the near term. Nifty reversed from the target zone and is now heading lower to test the Correction levels. The relevant Retracement levels are placed at 8601-8478-8356. Also the Target zone between 8893-9030 will continue to act as Resistance zone in the near term.
The weekly Upward Gap between 8531-8530 which is not only a Measuring Gap but will now also act as strong support. The target as per the Gap hypothesis comes at 9100, provided Nifty continues to stay above this weekly gap.
RSI has just moved lower from being overbought whereas the Stochastic Oscillator %K (87) and MFI (84) are still overbought. ADX has moved higher to 31, suggesting uptrend is gaining strength. Directional Indicators continue in Buy mode as +DI remains above –DI. OBV and Bollinger Band continue in Buy mode. Thus certain Oscillators are overbought suggesting one has to be cautious in the near term.
Nifty continues to remain above the short term average of 20dma @8529, medium term average of 50dma @8422 and also the long term average of 200dma @7828. Thus the trend in the short term, medium term and long term timeframe continue to remain bullish.
The Volatility Index, India VIX gained over 13% for the week and has finally managed to close above the level of 20. The VIX is now well on its way towards a target of 28. Option data suggest highest Put Open Interest is at 8000 followed by 8500, whereas the highest Call build-up is at the strike of 9000. Thus Option data suggests a wide trading range with immediate support coming in at 8500 and resistance around 9000.
Stock of the week:
Apollo tyres
The Stock has given break out of the Inverted Head & shoulders pattern on the daily charts with good volume. The pattern target lies at 272 with the stop loss of 226. The Stock can be bought at cmp & on fall till 236 with the stop loss of 232 on closing basis for the target of 250-254-259-262.
Nifty opened the week at 8871, made a high of 8996, low of 8775 and closed the week at 8808. Thus the Nifty closed the week with a loss of 27 points. On the daily charts, Nifty formed a big Opening Black body Marubuzo which completely engulfed previous four days candle. This resulted in Bearish Engulfing pattern on the daily charts. On the weekly chart, it has formed a small black body candle with a longer upper shadow. The upper shadow indicates selling seen at higher levels. Thus daily candlestick pattern points towards bearishness in the near term whereas the weekly study is less bearish than the daily study.
On the monthly chart, Nifty have registered a candlestick pattern which is like Bullish Engulfing pattern. But it is actually termed as the Double Lovers Suicide pattern which is a bearish pattern. It requires a confirmation in the form of a black body candle in the next month. But if the February month candle closes above the high of this pattern i.e. above 8996 then the above pattern will stand negated.
As mentioned last week, the target levels 8893-9030 were expected to provide resistance to the index in the near term. Nifty reversed from the target zone and is now heading lower to test the Correction levels. The relevant Retracement levels are placed at 8601-8478-8356. Also the Target zone between 8893-9030 will continue to act as Resistance zone in the near term.
The weekly Upward Gap between 8531-8530 which is not only a Measuring Gap but will now also act as strong support. The target as per the Gap hypothesis comes at 9100, provided Nifty continues to stay above this weekly gap.
RSI has just moved lower from being overbought whereas the Stochastic Oscillator %K (87) and MFI (84) are still overbought. ADX has moved higher to 31, suggesting uptrend is gaining strength. Directional Indicators continue in Buy mode as +DI remains above –DI. OBV and Bollinger Band continue in Buy mode. Thus certain Oscillators are overbought suggesting one has to be cautious in the near term.
Nifty continues to remain above the short term average of 20dma @8529, medium term average of 50dma @8422 and also the long term average of 200dma @7828. Thus the trend in the short term, medium term and long term timeframe continue to remain bullish.
The Volatility Index, India VIX gained over 13% for the week and has finally managed to close above the level of 20. The VIX is now well on its way towards a target of 28. Option data suggest highest Put Open Interest is at 8000 followed by 8500, whereas the highest Call build-up is at the strike of 9000. Thus Option data suggests a wide trading range with immediate support coming in at 8500 and resistance around 9000.
Stock of the week:
Apollo tyres
The Stock has given break out of the Inverted Head & shoulders pattern on the daily charts with good volume. The pattern target lies at 272 with the stop loss of 226. The Stock can be bought at cmp & on fall till 236 with the stop loss of 232 on closing basis for the target of 250-254-259-262.
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