Last week it was mentioned that “Index has received support from its respective long-term moving averages. Some more correction/consolidation is likely. However Index is in highly oversold state and any up move above 5700 can trigger to 5770/5863.” What next – Nifty gave a pullback till 5755 hardly manage to reach near 5770 thus failing to cross above 5770 finally dropped down to 5535 for the week.
Sensexx has dropped near the 'gap' area between 18050 and 18300. A bounce from the 'gap' area is a possibility. If the gap gets filled then the index is likely to bounce thereafter. Sensex is correcting its entire up move from 15135 to the top of 20203. Now, the 50% fib level of the up move is at 17669. keep an eye at the gap area if it gets filled then look for a support at 17669. Nevertheless any further fall or a close below this level should be considered as a change in trend.
The cues are mixed with no signs of strong momentum to get into a firm trend either way. Technical indicators are looking bearish and oversold. Positive divergences are seen so one can expect a bounce towards 200 DEMA.
Nifty managed to close below the 200 day MA which usually acts as strong support/resistance. But on Thursday Index broke 200 DEMA and SMA with ease on a gap down opening placing a low of 5535 and closing below all the support lines which is certainly a sign of weakness indicating further fall.
Nifty managed to close below the 200 day MA which usually acts as strong support/resistance. But on Thursday Index broke 200 DEMA and SMA with ease on a gap down opening placing a low of 5535 and closing below all the support lines which is certainly a sign of weakness indicating further fall.
There is a 'gap' area seen between 5526 and 5447, which was formed in Sept '12 and this should be looked upon as strong support. Generally it is observed that these open 'gaps' are filled. hence there is a high possibility that index will fall further till 5447 to fill the 'gap'. The fib level for the entire up move from 4531 to 6112 is about 5510 which is near the 'gap' area of 5526. However the 50% fib level is seen at 5321. Now, considering the top of 6338 formed in 2010 the fib level is at 5435. Nevertheless any further fall below the fib level of 5321 should be considered as change in trend. So if Nifty falls to 5450 one should unwind their shorts and focus on longs expecting a sharp pullback from these levels.
Conclusion: Sensex and Nifty have dropped near the 'gap' area formed in Sept '12. Index can bounce from these 'gaps'. However filling of the 'gap' is a possibilty. Keep an eye on 5526 and 5510 closely if breached it can fall further to 5447 where one can accumulate longs with stops respectively at 5400 and 5321.
No comments:
Post a Comment