Dark cloud stalls near-term bull run

Money Times - - Trading On Technicals - By Hi­ten­dra Va­sudeo

Last week, the Sen­sex opened at 32361.36, reg­is­tered a high at 32524.10 and moved to a low at 31886.09 be­fore it closed the week at 31922.43 and thereby showed a net fall of 350 points on a week-to-week ba­sis. A Dark Cloud Cover can­dle­stick pat­tern was formed at the end of the week after test­ing the re­sis­tance/sup­ply zone, which sug­gests that a pos­si­ble near-term short re­ver­sal is likely to be in place un­less an im­me­di­ate break­out and close above 32686 is wit­nessed with a bullish can­dle.

Daily

After the peak of 32686, the Sen­sex fell to 31128, which took 7 trad­ing days. The rise from 31128 to 32524 took

25 days, which is typ­i­cally a B struc­ture. As a re­sult of the fall on the daily chart, a C struc­ture is likely now.

The lower top at 32422 was formed on 19/09/2017 fol­lowed by In Day on 20/09/2017. Post in Day, the 2-day high/low is crit­i­cal for the next di­rec­tional move­ment. After test­ing the sup­ply zone of 32394-32686 and In Day struc­ture, the 2-day high/low of post In Day be­comes crit­i­cal.

A break­down be­low the 2-day low trig­gered the fall on Thurs­day and Fri­day. A large bear­ish can­dle on Fri­day makes a mark since Thurs­day saw a mild re­cov­ery from the low of 32164 and it vi­o­lated the same on Fri­day for a down­side trig­ger. The C struc­ture lower level could be as low as 32339 - 30952 for the near-to-short-term.

Weekly

Dark Cloud Cover last week is in­dica­tive of a pos­si­ble lower top against the top of 32686. Sup­port will be at 31797-31560.

A fall and close be­low 31560 can lead to 31128. Re­sis­tance will be at 32110-32335-32524.

Monthly

July and Au­gust 2017 wit­nessed two equal monthly ranges in the op­po­site di­rec­tions but Septem­ber got stuck in the range.

The band is 32686 to 31017 and Oc­to­ber will look for the next di­rec­tional move­ment out­side the band. At the higher level, re­sis­tance and profit-book­ing will con­tinue till 32686 is not crossed. Monthly chart sup­port point will be 31128-31017-30680.

Quar­terly

Sup­port on the quar­terly chart will be at 31522-31017-30921 and on deeper correction, sup­port will pro­tect the slide.

Trend based on Rate of Change (RoC) Daily chart:

1-Day trend - Down 3-Day trend - Down

8-Day trend - Down

Weekly chart:

1-Week trend - Down 3-Week trend - Up 8-Week trend - Down

Monthly chart:

1-Month trend - Up 3-Month trend - Up 8-Month trend - Up

Quar­terly chart:

1-Quar­ter trend - Up 3-Quar­ter trend - Up 8-Quar­ter trend - Up

Yearly chart:

1-Year trend - Up 3-Year trend - Up 8-Year trend - Up

BSE Mid-Cap In­dex Weekly chart:

1-Week trend - Down

3-Week trend - Down

8-Week trend - Up

An En­gulf­ing Bear can­dle­stick pat­tern stalls the rise of the

BSE Mid-Cap in­dex.

A fur­ther rise is above 16183 and traders may use the in­tra-week rise to exit long and book prof­its.

The lower level of 14905 could be tested, which is the Weekly Re­ver­sal Value (WRV). In the past, we have seen correction hit­ting the WRV be­fore re­cov­er­ing to a new high.

BSE Small-Cap In­dex Strat­egy for the week

1-Week trend - Down

3-Week trend - Up

8-Week trend – Up

An En­gulf­ing Bear can­dle­stick pat­tern stalls the rise of the BSE Small-Cap in­dex. Sup­port will be at 16145-15873. A deeper correction is be­low 15873 and in that case, it will hit the WRV, which is at 15441. Profit-book­ing is broadly sug­gested for the Sen­sex and Sen­sex-re­lated stocks in the re­sis­tance/sup­ply zone of 3241232686. The high reg­is­tered last week was 32524 and profit-book­ing pres­sure was wit­nessed and in­ten­si­fied on Fri­day to a low of 31886.

As a re­sult of the Dark Cloud Cover can­dle­stick pat­tern, traders long can exit on a rise to the re­sis­tance range of 3211032335 with a stop loss of 32686.

Ex­pect 31128 to be tested with volatil­ity. Trade long on in­dex only on a break­out and close above 32686 and Sen­sex stocks which make 52 week highs. Exit long and book prof­its in the rest of the stocks till a new high is not reg­is­tered or on a sub­stan­tial over­sold con­di­tion on the weekly or monthly charts.

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