AAKASHAYA PATRA WEEKLY MARKET OVERVIEW: 13.09.2020

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After forming a Bearish Engulfing pattern, the Nifty as expected started moving lower before finding some Support. The Rescue act was done by the 50dma which acted as a Support. The bounce-back has once again raised questions about the strength of bearishness, which had started with the formation of Bearish Engulfing pattern. To be fair to the Bears, the Market is in such a Bull grip that any attempt by the Bears to pull the Market down, comes undone and it ends up as a Buying Opportunity. But the Bearishness of the Bearish Engulfing pattern is still intact and it will get nullified only when Nifty closes above 11794. A break of 50dma (11189) will result in a Bearish pattern formation, which can lead the Nifty down to test the 200dma (10793). One needs to maintain focus on Mid-caps and Small-Caps as they are more likely to continue with their out-performance

.Technically Speaking:-    

Sensex opened the week at 38284, made a high of 38978, low of 37935 and closed the week at 38854. Thus it closed the week with a gain of 497 points. At the same time the Nifty opened the week at 11359, made a high of 11493, low of 11185 and closed the week at 11464. Thus the Nifty closed the week with a gain of 131 points.

On the daily charts, both the indices have formed a Doji pattern, which is a sign of indecision. On the weekly timeframe, both Sensex and Nifty have formed a White body Candle which is just falling short of being a Real body candle. No way does the Weekly Candle change the status of the Bearish Engulfing pattern which got completed two weeks ago. Thus the daily Candlestick study indicates a neutral bias whereas the Weekly Candlestick pattern is suggesting a minor Bearish to neutral bias, as the upside remains capped.

 On Thursday, both the indices went up creating a Bullish Rising Gap between Sensex 38367- 38252 and Nifty 11327-11298. This Bullish Gap will now act as a Support in the near term. The current Correction can end only if we have a weekly closing above Sensex 40010 and Nifty 10794 which is the failure point of the Bearish Engulfing pattern.

The indices are in a Trading Range between Sensex 36700-40000 & Nifty 10800-11800. This week the indices went down before finding a Support in the form of 50dma (Sensex 37954 and Nifty 11189). This Support becomes crucial, as a break of this will not only complete a short term Bearish Reversal pattern but also will lead the indices down to test the long term critical Support of200dma (Sensex 36689 and Nifty 10793).

This week both the indices tested and took Support at the Medium term average of 50dma (Sensex - 37954 and Nifty 11189) before bouncing back. This bounce-back took the indices above the Short term average of 20dma (Sensex - 38689 and Nifty 11426). Both the indices continue to remain above the Long term average of 200dma (Sensex - 36689 and Nifty - 10793). Thus the Trend in the Short term timeframe has turned Bullish whereas the Trend in the Medium Term as well as Long Term Timeframe continues to remain Upwards.

MACD as well as Price ROC both are in Sell mode. RSI (56) suggests Bullish momentum. Stochastic Oscillator %K (34) is above %D and hence in Buy mode. ADX (20) suggests prior Trend has lost all its strength. Directional Indicators have just seen a Bullish Crossover as +DI went above -DI and hence in Buy mode. MFI (58) suggests Positive Money Flow. OBV continues in Buy mode. Thus majority of Momentum based Oscillators are suggesting a slight Bullish bias.

Options data for September series indicate highest Call Open Interest at the strike of 11500. Highest Put build-up is at the strike of 11000. Thus Options data suggest a trading range with Resistance @ 11500 & Support @ 11000.uzuki 532500 7190.00

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