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14.07.2019

AAKASHAYA PATRA WEEKLY MARKET OVERVIEW:


The disappointment in the Budget was clearly reflected in the Market movement this week as the indices struggled to move higher. As a result, Nifty breached the lower end of the trading range and entered the strong Support Zone of Weekly Bullish Gap 11591-11426. Currently the Nifty has taken support inside this zone but more precisely at the confluence of 100 dma (11522) and Trendline (11528). This confluence has already come to the rescue for 4 trading days in May and it has done the same this week for 4 days. A bounce can take the Nifty right upto the Bearish Gap (11771-11797), which will act as Resistance. A break of the confluence Support can lead the Nifty down to another Support Zone of 11300-11315.

Technically Speaking :-

Sensex opened the week at 39476, made a high of 39476, low of 38435 and closed the week at 38736. Thus it closed the week with a loss of 777 points. At the same time the Nifty opened the week at 11770, made a high of 11771, low of 11461 and closed the week at 11552. Thus the Nifty closed the week with a loss of 259 points.On the daily charts, both Sensex and Nifty have formed a small black body candle which is forming a Bearish Engulfing pattern. But Bearish Engulfing cannot be given significance as both days have small bodies and also the pattern has formed in downtrend. On the weekly chart, both Sensex and Nifty have formed an Opening Black body Marubozu, which is indicative of the Bearish mood of the market. Thus, weekly candlestick pattern is showing signs of bearishness over daily candlestick study.

This week, Nifty opened Gap down and formed a Bearish Gap 11771-11797 on daily as well as weekly charts. Any pull-back will face strong Resistance at this Bearish Gap. On the other hand, Sensex has not formed any Bearish Gap on daily or weekly charts.
This week saw the Trading Range being broken on the down side and the indices entering the strong Support zone formed by the daily as well as weekly Bullish Gap between Sensex 38570-38001 and Nifty 11591-11426. This Gap has acted as strong Support as of now. Inside the Gap, a strong Support has been provided by the confluence of 100 dma (11522) and Trendline (11528) for
last four trading sessions. Thus there is little to worry for the Bulls as long as the Confluence Support holds.Both the indices had completed a Bullish Cup & Handle pattern in March 2019 and now they are heading towards their target of Sensex 41053 and Nifty 12232. Also a Rounding Bottom got completed,which has a target of Sensex 44687 & Nifty 13516.This week, both the indices closed below the short term average of 20 dma (Sensex - 39268 and Nifty - 11739) as well as the medium term average of 50dma (Sensex - 39064 and Nifty - 11708).
Both the indices continue to remain above the long term average of 200dma (Sensex - 37009 and Nifty - 11112). Thus the Trend in the long term Timeframe continues to be Bullish, whereas the Trend in the short term as well as medium term Timeframe has turned Bearish.MACD and Price ROC are both negative and in Sell mode. RSI (40) suggests Bearish momentum.Stochastic Oscillator %K (16) is above %D and hence in Buy mode. ADX (23) suggests Downtrend slowly developing. Directional Indicators are in Sell mode as +DI is below -DI. MFI (65) suggests Positive Money Flow. Thus majority of Oscillators are suggesting a bearish bias.

Options data for July series indicate highest Call Open Interest remains at 12000 and the highest Put build-up is shifted to the strike of 11300. Thus Options data suggests a trading range with resistance at 12000 and strong support at 11300.

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