23.02.2020
AAKASHAYA PATRA WEEKLY MARKET OVERVIEW
It was a
truncated week but not bereft of excitement and uncertainty. The pull-back witnessed
on Wednesday has clearly defined the Trading Range for the Nifty, which is
11900-12250. Since Nifty has formed a Bullish Island Reversal on Wednesday,
there is high probability of further upward movement. Only a close below Nifty
11908; will negate the Bullish Island Reversal pattern. For the week gone by,
Nifty has been gyrating between 100dma as Support and 50dma as Resistance. A break
of 50dma on the upside is likely to propel Nifty towards life-high levels and a
bearish break of 100dma will push the Nifty down to test the Support of 200dma.
Once again the Mid-Cap Index outperformed the Frontline Indices, which
indicates that the Mid-Cap Rally is likely to gather more steam in the days to
come.
Technically
Speaking :-
Sensex
opened the week at 41324, made a high of 41420, low of 40610 and closed the
week at 41170. Thus it closed the week with a loss of 87 points. At the same
time the Nifty opened the week at 12131, made a high of 12159, low of 11908 and
closed the week at 12080. Thus the Nifty closed the week with a loss of 33
points.On the daily charts, both the indices have formed a Black body candle
which is just short of being called a real body candle. On Wednesday, Nifty
almost completed an Abandoned Baby Bottom, but fell short being called as one,
as the White body candle on Wednesday did not have a Real body. On the weekly
chart, both the indices have formed a Black body Spinning Top with a longer
lower shadow, which indicates buying at lower levels. Thus candlestick study
indicates aslightly bullish bias.Nifty has formed a Bullish Island Reversal on
Wednesday, which has generated a Buy signal. Some
allowance has been granted for Wednesdays candle as it was not a big or real
body candle.Failure point for the Island Reversal is 11908. Thus expect some
upside as long as the Island Reversal remains intact.
This week
both the indices have formed a Bullish Gap. Sensex has formed a Bullish Gap
between 41048-41042 and Nifty between 12042-12030, which is likely to act as
strong Support.Below this lies a strong Bullish Gap formed between Sensex
40117-40014 and Nifty 11783-11749.
This
Bullish Gap will act as strong Support. Stronger Support will be seen further
down at the Support Zone of Nifty 11602-11681 which is due to the confluence of
200DMA, 50WMA, 161.8% and 61.8% Retracement levels.Once Sensex closes above the
41700 and Nifty above 12250, both the indices will move higher towards their
recent Life-high levels again. Both the indices will then head towards their
Bullish Cup & Handle target which is at Sensex 42895 and Nifty 12751.
Failure point will be a close below
Sensex
38718 and Nifty 11490. Higher term Sensex target remains at 44700 and Nifty at
13500.This week, both the indices tested the Short term average of 20dma
(Sensex - 40993 and Nifty - 12042) and also managed to close above it. Both the
indices tested the Medium term average of 50dma (Sensex - 41261 and Nifty
12141), but could not close above it. Both the indices continue to remain above
their Long term average of 200dma (Sensex - 39403 and Nifty - 11681). Thus the Trend
in the Short term is Up, whereas the Trend in the Medium term Timeframe is
still Down. But the Trend in the long term Timeframe still continues to be
Bullish.
MACD and
Price ROC are both in Buy mode. RSI (50) is positive, which suggests tilt
towards Bullish momentum. Stochastic Oscillator %K (71) is below %D and hence
is in Sell mode. ADX (15) suggests further consolidation. Directional
Indicators are in Sell mode as +DI is below -DI. MFI (50) suggests minor
Positive Money Flow. Thus Oscillators are suggesting a mixed bias.
Options
data for February series indicate highest Call Open Interest at 12200 and
highest Put build-up is at the strike of 12000. Thus Options data suggests a
trading range with Resistance at 12200 and Support at 12000.
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