Support to be under pressure
The effect of the Dark Cloud Cover candlestick pattern was visible last week till Thursday. The weekly update of last week in this edition is based on Thursday, 28 September 2017.
The movement of the Sensex on Friday, 29 September 2017, could be critical for the next week beginning Tuesday, 2 October 2017. From 2 October 2017, if the Sensex sustains above the high recorded on 29 September 2017, then a pullback could resume but if it breaks the low, then the slide could continue.
The low of 31128 was critical and on Thursday, the Sensex recorded a low of 31081 before it closed at 31282. Therefore, the critical support zone can be 31128-31081 for the near-term.
The next support will be at 30680.
The demand zone on the weekly chart will be at 3068031294.
As long as the Sensex remains or consolidates in the demand zone, the Sensex can still attempt to test back the peak.
Violation of 30680 in the week to come will confirm a deeper correction. The correction will be of the rise from 25753 to 32686. The retracement levels for the correction will be placed at 30333, 29248 and 28401.
The last top of 29077 was crossed for a rally to 32686. This earlier top of 29077 could provide resistance but it must not be breached on a closing basis in time to come.
A Head and Shoulder pattern is being witnessed with a breakdown from the neckline, which implies a slide towards 30000.
The 38.2% retracement is around 30333 of the rise from 25753 to 32686. Support at the current level to 30680 is critical in days to come.
A breakdown was already witnessed and if a pull back is seen, then it can be an intra-week rise towards 31460-3183832016.
A rise and close above 32016 will help to eventually provide a breakout above 32673.
Momentary focus is on whether the Sensex survives the current selling pressure from the current level to 30680. The market needs to absorb the selling for consolidation and not allow sharp selling pressure to break the support.
Trend based on Rate of Change (RoC) Daily chart:
1-Day trend - Up 3-Day trend - Down 8-Day trend - Down
1-Week trend - Down 3-Week trend - Down 8-Week trend - Down
1-Month trend - Down 3-Month trend - Up 8-Month trend - Up
1-Quarter trend - Up 3-Quarter trend - Up 8-Quarter trend - Up
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 - Down
Effects of an Engulfing Bear candlestick pattern was witnessed and could extend the slide to 14726-14484. Expect a consolidation attempt at the lower level around WRV-14906.
BSE Small-Cap Index
1-Week trend - Down 3-Week trend - Down 8-Week trend - Up
The effect of Engulfing Bear candlestick pattern was witnessed. Expect correction towards WRV-15445 for consolidation.
Strategy for the week
The Sensex did test 31128 as expected and the low was 31081.
A downside momentum will continue on a fall and close below 31081. Traders long need to exit on a rise to 31460-31838-32016 as an when an opportunity arises. Lower range for the week can be 30904-2969.