Broad mar­ket in­dices dom­i­nate

Money Times - - Trading On Technicals - By Hi­ten­dra Va­sudeo

Last week, the Sen­sex pro­vided the fol­low-up rise to the break­out wit­nessed two weeks back above 32700. The ex­pected level of 33600 was tested last week. The Sen­sex opened at 33260.10, at­tained a low at 33164.28 and moved to a high at 33733.71 be­fore it closed the week at 33685.55 and thereby showed a net rise of 528 points on a week-to-week ba­sis.

Daily Chart

The daily chart shows the up­trend, which be­comes clear if one observes the line chart. The can­dle at times pro­vides more qual­ity in­for­ma­tion of the price be­hav­ior but volatil­ity could dis­turb the mind. The can­dle shows the Hang­ing Man, which sug­gests that im­me­di­ate sup­port is at 33527. A fall be­low 33527 can bring about mi­nor in­tra-week cor­rec­tion to weekly sup­port lev­els.

Over­all, the up­trend is ex­pected to con­tinue with in­tra-day or in­tra-week cor­rec­tions to show strong can­dles over­all on the weekly chart.

Weekly Chart:

The higher range for the week could be 33891-34460. Sup­port dur­ing the week will be at 33527-33321-33164. The 161.8% re­trac­ment of the fall from 32686 to 31081 was tested and there­fore, in­tra-week cor­rec­tion could hap­pen.

On a fur­ther sus­tained rise and close above 33733, ex­pect the rise to test the week’s higher range. But the ob­jec­tive could be to move to­wards the 261.8% re­trace­ment of the fall from 32686 to 31081. The 261.8% re­trace­ment level is at 35215.

Yearly Chart:

In the Jan­uary and Fe­bru­ary 2017 is­sues, we had fore­cast the yearly lev­els for the Sen­sex. The lev­els in­di­cated were 29637 and 36220. Cur­rently, the Sen­sex is at 33685 and is now chas­ing 36220 by De­cem­ber 2017. The years 2016 and 2015 were in­de­ci­sive can­dles af­ter the bull run in 2014. The year 2017 is the con­ti­nu­ity of the same bull run as a break­out above 30024 as seen on the yearly chart.

On the monthly chart, the Oc­to­ber 2017 is a break­out above its higher top of 32686, which sug­gests con­tin­u­a­tion of the mo­men­tum of the higher top and higher bot­tom for­ma­tion from 22494.

The Sen­sex is po­ten­tially look­ing to test 36220–Yearly Level 4 by De­cem­ber 2017. As­sum­ing the year end now, the year 2018-First level, which is Yearly Level 3, will be at 36130. Yearly Level 4 by De­cem­ber 2018 is 43417. Dur­ing the year 2018, if a cor­rec­tion is wit­nessed, then the Yearly Cen­ter point is at 31288 and Yearly Level 2 is 28843. The fo­cus is more on the higher lev­els. Ex­pect the Yearly 2018 to show higher low and higher high at the end of 2018 with a pos­i­tive yearly can­dle.

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

1-Day trend - Up 3-Day trend - Up 8-Day trend - Up

Weekly chart:

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

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 - Up 3-Week trend - Up 8-Week trend - Up The ex­pected level of 16824 is al­most at­tained as the high last week was 16808. Ex­pect re­sis­tance and profit-book­ing around 16824. The next leap is huge. There­fore, ex­pect mi­nor side­ways move­ment to con­sol­i­date at the cur­rent level for a cou­ple of weeks be­fore the next rally. Al­ter­na­tively, the rally will have to get sharp and ver­ti­cal to notch up 17898.

The over­all sup­port will be at 16426-16379

BSE Small-Cap In­dex

1-Week trend - Up

3-Week trend - Up

8-Week trend - Up

Ex­pect a rally to 18234. A re­ver­sal for deeper cor­rec­tion can be be­low 17300 and till then, a cor­rec­tion is an op­por­tu­nity to ac­cu­mu­late.

Re­la­tion­ship of Mid-Cap/Small-Cap/Sen­sex

From the year 2007 to 2013 broadly, we can see that the Sen­sex had out­per­formed. From 2014 to 2017, the Mid-Cap and Small-Cap in­dices im­proved their per­for­mance rel­a­tively. The Mid-Cap and Small-Cap in­dices are on par with lit­tle to sep­a­rate. The role of Mid-Cap and Small-Cap in­dices is get­ting dom­i­nant and is likely to con­tinue un­less a cat­a­strophic fall is wit­nessed, which looks un­likely till Yearly Level 4 of 2017 (36220) on the Sen­sex is not at­tained.

Strat­egy for the week

Traders long can re­vise the stop loss to 33100. Ex­pect the higher range of 33891-34460 to be tested. In­tra-week sup­port point of 33527-33321 can be used for buy­ing if the lower lev­els are at­tained first. Main­tain the stop loss of 33100.

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