Cover short positions
Last week, the Sensex opened at 34412.35, made a low at 33723.53 and moved to a high of 34858.35 before it closed the week at 34733.58 and thereby registered a net rise of 356 points on a week-to-week basis. A recovery candle was seen, which soaked the selling pressure last week.
A swing bottom appears to be in place, which suggests a near-term rise to DRV-35684. Weakness may resume below 33723. Till then, a weak opening or correction during the week could soak the selling pressure. The markets will keep recovering unless a sharp slide below 33723 is seen on a closing basis.
Support levels are placed at 34438-34018-33723. Higher range for the week is 35153-36288. Higher low and higher high this week with a bullish candle can set the rise for retracement of the fall from 38989 to 33723. Retracement levels are placed at 35716-3633337024.
The last major bottom witnessed was 32484. The demand zone attached to it on the weekly chart is 33354-32484. Overall, the lower range has support and even if 33723 is violated, the demand zone on the weekly chart may try to soak the selling pressure.
BSE Mid-Cap Index Weekly chart:
Support was seen at 13632 as the low and close registered last week was 13538 and 14286 respectively. Weakness will resume below 13538. Post 09/10/2018, mid-cap participation on the daily chart has improved positively. A pullback retracement could see a rise towards 14876-15283-15681.
BSE Small-Cap Index Weekly chart:
Weakness will resume below 13396. Small-caps witnessed buying from the lower range even though the Nifty saw a gap-down opening on Thursday. Resistance will be at 14325-14586. A pullback rally could resume on a breakout and close above 14586.
Strategy for the week
Last week, the Sensex made a low of 33723 due to selling pressure. But buyers emerged and soaked the selling pressure to show an intra-week recovery.
Traders may cover short positions at 34733 or below as bulls are trying to take charge of the market. Further selling will be seen below 33723. Traders short can maintain their stop loss of 34900.