Updates on Precious Metals & Energy Markets on 26th Dec

Silver March future closed at 57729 losing some gains on 24^th Dec. Nevertheless the trend and momentum still remains down but indicators showing signs of recovery and also Double Bottoms were furnished near $29.61 in Silver Spot. The support on monthly chart of 57187 still remains intact and the recent lows were also placed near (57187) at 57223 so one can expect a technical bounce till 58400/58815 with extension till 59372. Only a break below 57,000 one can witness a sharp fall which will negate the above view and also the double bottom.

Gold Feb future closed at 39854 and remains in downtrend. However weekly supports were mentioned at 30409 level and lows were formed at 30370 which is very close to 30400 and it bounced back from these levels which is again suggesting and confirming a technical bounce back. On hourly charts, 30750-30800 is the support area and if upholds then expect prices to rally till 31020 with extension till 31167. Buy and hold long with stop loss below 30750 and expect 31020.

Crude Oil Jan future closed at 4909 and lows were formed near 4878 which remains a good support but momentum indicating some bearishness. Below 4877 we may see slide in crude oil prices till 4828/4807. However on hourly charts 4972 remains top now and next major move can be expected only above the top of 4989 till then side ways to downside pressure is likely on higher levels. Stay aside till further confirmation or trade with levels.

Natural Gas Dec future closed at 184.9 after a gap down opening. However, hourly chart suggests downside momentum. Bearishness still persists with oversold signs. Fresh shorts can be added in the range of 189.2-190.3 area and expect prices to correct till 180-173 in coming days. Tough resistances are seen at 194-197.

Weekly Outlook of Nifty from Dec 24th - Dec 28th

Last week it was mentioned that ‘Nifty is still trading within the long-term resistance zones. Technical chart suggests that NIFTY Index is in overbought zone and index is not able to hold the gains at higher levels and closing near the low of the day consistently. For the week watch consolidation/correction at 5838-6000 with extension to 5750.’

During the week Nifty continued to trade in the same consolidation manner as earlier week. However Nifty Index breached the support of 5850 but it dropped to end only near the lower trend line support of (5815) low posted at 5823 and managed to hold the “precise trend deciding level of Nifty fut which was mentioned at (5838)” the low posted for the week was 5838.05.    

Sensex, I had mentioned earlier is now trading inside the long term resistance zone of 19132-19800 however it exactly dropped towards the support of 19137 posting a low of 19140.
The index has been consolidating within the long-term resistance zone between 19000 and 19800 for the past three weeks now. however the bull market still remains intact.   

The weekly chart of Sensex is getting support from its rising 20 day EMA. Even if the support gets breached, there should be stronger support from the 19000 level, which is the lower edge of the resistance zone.  Expect consolidation within the resistance zone to continue a bit longer.
In spite of some moderation in inflation and improvement in industrial production, RBI kept the interest rates unchanged. This indicates that economic growth will remain on low focus for a while. 

 
The weekly chart pattern of Nifty index is similar to the Sensex chart. The index is consolidating within a long-term resistance zone between 5750 and 5950, and currently seeking support from its 20 day EMA.
Conclusion: The Sensex and Nifty are continuing their consolidations within their long-term resistance zones. The consolidations are likely to continue for some more time before a likely upward break out.

Volatility may continue and one can remain bullish with cautiousness in market. Nifty index strong support is at 5815. Trend will enter in negative zone below 5802. However the Long term trend line support comes near 5718 and any close below this level we may see impact in the market. Fresh rally will start only above 5930 level. The global Indices are waiting for fiscal cliff solution. If solution is not reached to the result then negative impact may be seen in the market and under this situation Nifty may get dragged to the next support level of 5735 which is the 66.6% retracement level. Negative divergences are visible on technical parameters so be alert.  The supply zone remains 5892-5912. For the week let us watch 5950-5815 with extension limited to 6000/5750.

Outcome of USD/INR

On 14th Dec it was mentioned that 'USD/INR future On chart suggests that above 54.85 one can witness a noticeable change in trend and look forward for upside targets of 55.15, 55.53 and even 55.87, however 54.4 is major support on chart and 54.22 remains the double bottom area.' What happened next? On 14th Dec placed a low at 54.37 support mentioned (54.40) then in next trading session it crossed 54.85 and finally today met the target placing a high at 55.13.

Weekly Outlook of Nifty from Dec 17th - Dec 21st

Last week it was mentioned that ‘On hourly chart Nifty is falling towards its lower trend line support which is around 5815. Thus falling till 5815 is not at all ruled out. I highly expect Nifty to correct first and then to resume upside. The Derivative data suggests that the upper side for NIFTY Index is restricted at 6000. Technically speaking NIFTY index has formed “Dragonfly Doji” candlestick on Thursday followed by “Bearish Engulfing” candle on Friday. It is a bearish signal for the coming week.’

During the week Nifty index exactly acted as predicted it traded end-to-end between set sell zone of 5950-6000 (high of 5965) and buy zone of 5830 (low of 5839) before closing the week at 5879.

Sensex posted a new 52 week high of 19612 and since past two weeks Sensex is trading inside the long-term resistance zone between 19100 and 19800 but is still struggling to cross its long term resistance. Daily technical indicators are bullish, but correcting from overbought conditions.

Sensex should receive good supports from its 20 day EMA and the 19000 level. On the upside, expect resistance from the 19800 level and the top edge of the upward-sloping channel. Some more consolidation/correction is expected before the breach of the resistance zone.

The weekly chart of Nifty index has corrected after breaching the 5950 level. A convincing breach of 5950 should take the index to the upper edge of the upward sloping channel at 6150, before a meaningful correction takes place.

Weekly technical indicators are bullish, but showing signs of slowing upward momentum. The MACD has risen off its signal line. The ROC is still positive, but below its falling 10 week MA. The RSI and Slow Stochastic are both inside their overbought zones, but sliding down. Downside support is expected from the 5751 if at all Nifty corrects from here.

Conclusion: Nifty is still trading within the long-term resistance zones. Technical chart suggests that NIFTY Index is in overbought zone and index is not able to hold the gains at higher levels and closing near the low of the day consistently. The support for the NIFTY index remains at 5750 for the coming week. As mentioned earlier the upside remains restricted at 6000 for Nifty Index. It is likely to spend some more time within the resistance zones before breaching them. For the week watch consolidation/correction at 5838-6000 with extension to 5750.

An Update on USD/INR

USD/INR future witnessed with a gap down opening and set on rally punching high at 54.67 and closed near 54.62. For today expect some correction and then continuation of up move. On chart above 54.85 one can witness a noticeable change in trend and look forward for upside targets of 55.15, 55.53 and even 55.87, however 54.4 is major support on chart and 54.22 remains the double bottom area.

Weekly Outlook of Nifty from Dec10th - Dec 14th

Last week it was mentioned ‘5950 and 6000 is the real test for the market. If it manages to cross above then expect Nifty index to make a new bull market high. So I think NIFTY might lose steam at 5950-6000 for consolidation/correction mode finding strong support at 5830-5780. Nifty is about to complete end-to-end move of set short term range of 5500-6000. However, further extended gains into 6349 in the short term can be expected but need to stay cautious and prudent to exit “long” positions at 5950-6000 and wait for close watch on price action there. Be cautious near the resistances.’

During the week NIFTY index exactly acted as predicted, in spite of the FDI decision in retail sector, NIFTY could not cross the barrier of 5950. Index reached up to 5949.85 and met the objective (5950) taking support from the mentioned 5830 level placing a low of 5838. Index could not sustain at the higher level and settled the week just around 5920. One could see that the expectations were very high for the upside break-out and everyone was extremely bullish but market deceived everyone by touching the critical resistance level at 5950.

Sensex has seen slightly higher weekly close inside the long-term resistance zone between 19132 and 19800 on the weekly chart. The index has been trading within an upward-sloping channel since touching a low of 15136. The top end of the channel is currently at 19800, which match with the top end of the resistance zone which means 19800 might act as a tough resistance in the near term. Technical weekly indicators are bullish but looking overbought also there are signs of negative divergences. Expect the index to correct/consolidate before attempting to cross 19800.

Nifty has reached the levels of 5950 which is a long-term resistance level. The daily technical indicators are looking overbought, and are showing negative divergences by failing to touch new highs. There is a good possibility of some correction/consolidation before the 5950/6000 level can be crossed. The upper end of the parallel channel within which Nifty has been trading for the past year is currently at about 6150. That will be the next level of resistance beyond 5950/6000. On the downside, good combined support from the rising 20 day EMA and the 5750 level is likely.

Conclusion: Indeed to say that market is in strong bullish mode but it has found resistances at exact technical levels. On hourly chart Nifty is falling towards its lower trend line support which is around 5815. Thus falling till 5815 is not at all ruled out. I highly expect Nifty to correct first and then to resume upside. For lower target Nifty must break 5870 level. On daily and weekly chart RSI is in overbought zone so traders must be alert on up side. Also one should remember that we are trading in fifth wave and nifty has already retraced. The Derivative data suggests that the upper side for NIFTY Index is restricted at 6000. Technically speaking NIFTY index has formed “Dragonfly Doji” candlestick on Thursday followed by “Bearish Engulfing” candle on Friday. It is a bearish signal for the coming week. Only a break above the resistances one should expect 6150.