As mentioned 2 weeks back the index faced tough resistance
at 6200 and we witnessed profit booking from there on. During the week Nifty
opened below 6000 and corrected more than 100 points, every rise faced selling
pressure indicating further weakness.
The weekly chart of the Sensex has taken support from its
20 week EMA. The 50 week EMA is rising. The major support is still intact. Everything
pointing to a technically healthy bull market. Weekly technical indicators are
showing some weakness, but remain bullish. The fall can be used as buying opportunity.
The daily chart of Nifty reflected what looked like H&S
pattern but the necessary volume confirmation
required, was missing all the time. In fact the entire correction seems
to have ended forming a ‘Falling Wedge’ pattern which denotes an eventual
upward breakout. This doesn’t mean that one should avoid the stop losses.
Indicators are looking bearish and correction may continue.
Conclusion: Sensex
and Nifty are correcting after touching 2 year highs. One can notice that 5850 is 50% Fib level of the recent
rally from 5477 to 6229. One can also spot a gap between 5853-5844. Hence, this
range becomes a crucial support zone for NIFTY Index.
A
break below 5850 would initiate a fall up to 5700/5670. Overall
the index will rise after the consolidation/correction is over. Use every
correction to add to your positions.
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