AAKASHAYA PATRA WEEKLY MARKET OVERVIEW: 04.10.2020

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WEEKLY MARKET OVERVIEW


 

*AAKASHAYA PATRA WEEKLY MARKET OVERVIEW:* 04.10.2020

The bounce-back which started from the 200dma went from strength to strength, as the Bulls recovered much of the lost ground in style. In the process, both the indices overcame the 20dma and 50dma, resulting in Short term as well as Medium term Trend turning Upwards. If the Nifty manages to surpass 11618, then it can result in failure of Bearish Head & Shoulders pattern and a retest of recent top of Nifty at 11794. On the downside, we have strong Support in the form of Bullish Gap at 11347-11295 which is also a strong confluence zone.

 Technically Speaking:-

Sensex opened the week at 37756, made a high of 38738, low of 37544 and closed the week at 38697. Thus it closed the week with a gain of 1309 points. At the same time the Nifty opened the week at 11140, made a high of 11428, low of 11099 and closed the week at 11416. Thus the Nifty closed the week with a gain of 366 points.

On the daily charts, both the indices have formed a Real White body candle after forming a Bullish Upward Gap, which indicates strength of the Uptrend. On the weekly timeframe, both Sensex and Nifty have formed a Real White body candle which is completing a Bullish Harami pattern. It is a Bullish Reversal pattern which requires confirmation. Thus daily as well as weekly candlestick study indicates Bullish bias in the near term.

This week, both the indices formed two Bullish Rising Gaps. The first Bullish Gap between Sensex 37544-37471 and Nifty 11099-11072 can be termed as Bullish Breakaway Gap. The second Bullish Gap between Sensex 38410-38236 and Nifty 11347-11295 can be marked as a Measuring Gap. If this Gap holds good, then the target as per Gap Theory will be at Sensex 40151 and Nifty 11852.

The Bullish Rising Gap between Sensex 38410-38236 and Nifty 11347-11295 will act as strong Support as it is also a confluence zone, with the 50dma (Sensex 38325 & Nifty 11310) and 20dma (Sensex 38302-11314) also falling within the Gap.

Two weeks back both the indices had completed a Bearish Head & Shoulders pattern on the daily timeframe. After such a stupendous upward move in this week, both Sensex and Nifty have managed a weekly closing at 38697 and 11416 respectively, which is just shy of the failure point of the pattern which is top of Right Shoulder i.e. at Sensex 39359 and Nifty 11618. A break of the above mentioned levels will result in testing of the recent Tops at Sensex 40010 and Nifty 11794. This week, Market recovered and managed a close above both the short term average of 20dma (Sensex - 38302 and Nifty - 11314) and even the medium term average of 50dma (Sensex – 38325 and Nifty - 11310). Both Sensex and Nifty continue to remain above the long term average of 200dma (Sensex - 36514 and Nifty - 10742). Thus the Trend in the Short Term as well as Medium Term Timeframe has turned Bullish, whereas the Trend in the Long Term Timeframe continues to be Upwards.

MACD as well as Price ROC are both negative and continue in Sell mode. RSI (54) suggests Bullish momentum. Stochastic Oscillator %K (61) is above %D and hence in Buy mode. ADX (19) suggests sideways consolidation. Directional Indicator +DI is at the same level as -DI, suggesting equal strength. MFI (55) suggests Positive Money Flow. OBV is not in confirmation. Sell signal on Bollinger Band has got negated as the indices have managed a close above the mean. Thus Oscillators are suggesting a Bullish bias in the near term. 

Options data for October series indicate highest Call Open Interest at the strike of 12000. Highest Put build-up is at the strike of 10500. Thus Options data suggest a wide trading range with Resistance @ 12000 & Support @ 10500.


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