Last week it was mentioned that “The Chart patterns suggest corrective modes after touching
strong resistance zones. Nifty fut forming a Doji shows a clear sign of
indecision among the market players. Nifty for coming week still looks
bearish. After touching the strong resistance zone, it is struggling hard to
find the next direction. NIFTY Index is consolidating in the range of
5630-5730. The ability to hold above strong short term base at
5630-5580 does provide good comfort but there is no strong momentum to take out
immediate resistance at 5740-5760.”
During the week Nifty Index traded exactly within the mentioned range of 5630-5730
in a bearish mode. Nifty nicely traded end-to-end of 5630-5730 range (low
for the week at 5641 and high at 5722) before closing at 5664 without breaking the channel band (5630-5730) and
not giving any confirmation for further direction.
Our markets continued to remain cautious amidst the corporate result
season and ahead of second quarter review of the RBI credit policy. FIIs were in a
profit booking mood last week and the index may see lower levels if they
continue selling in the coming week. Retail investors are still not
participating completely. The RBI will
announce the second quarter review of the credit policy on 30th October which
will possibly set the drift for November month.
However,
there are no strong cues to drive the market into bearish mode at this stage as
RBI is expected to shift to pro-growth/pro-investment monetary policy stance
and positive political developments for smooth passage of reform bills in the
Parliament.
The
Sensex consolidated within a narrow 300 point rectangular range, from which a
break out can occur in either direction. Any upward break out is likely to face
resistance from the zone between 19132 and 19750. On the downside, the unfilled
gap, the rising 50 day EMA should provide good supports.
The
weekly closing chart of the Nifty suggests a sideways flow with a slightly
downward bias. However, the index is trading above its 20 week and 50 week
EMAs.
Weekly
technical indicators are showing signs of weakening upward momentum. The MACD
is positive and above its signal line, but moving sideways. The ROC is also
positive, but has crossed below its 10 week MA. The RSI is on to the edge of
its overbought zone. The Slow stochastic is inside its overbought zone, but
sliding down.
Conclusion: Chart patterns of
Sensex and Nifty are consolidating within narrow ranges from which a breakout
can occur in either direction. The
overall view for the coming week still remains same as nothing has changed.
Index is still trading within immediate support and resistance level of
5630-5740. Hence preference would be to wait and watch for the confirmed signal
on a technical chart. Technical chart indicates a sign of consolidation phase
before a major price breakout. Keep an eye on 5630-5730 expect a sharp price
movement once NIFTY index breaks its trading range. On the down side breakout,
it will try to fill the gap near 5450 and any positive surprise from RBI
in a form of rate cuts would take index right up to 5940.
No comments:
Post a Comment