Sensex 32483 is crit­i­cal monthly sup­port

Money Times - - Trading On Technicals -

Last week, the Sensex opened at 34971.82, made a high at 35605.43 and moved to a low of 34140.32 be­fore it closed the week at 34315.63 and thereby reg­is­tered a net fall of 417 points on a week-to-week ba­sis. The pull­back rise was ter­mi­nated at the weekly re­sis­tance range of 35153-36288.

Daily Chart

A gap down on Fri­day af­ter a large bear­ish can­dle on Wed­nes­day marks a swing top for a lower top on the daily chart. A gap up was seen from 35162 to 35543 last Wed­nes­day. Last week’s high was 35605 and the Sensex tested the DRV. Sub­se­quently, a slide was seen fol­lowed by a gap down on Fri­day. Ex­pect the Sensex to test the last swing bot­tom of 33723, which could be vi­o­lated for a fur­ther down­side move­ment. Re­sis­tance gap is placed at 34563-34779. A rise and close above 34780 can show a near-term rise to­wards 3491335215.

Cur­rently, the trend ap­pears to be down for a lower top and lower bot­tom for­ma­tion with volatil­ity.

Over­all, a break­out and close above 35605 is needed to mark a ma­jor re­ver­sal and till then, the ob­jec­tive re­mains to exit long and sell on a rise.

Weekly Chart

The re­sis­tance lev­els are placed at 34687-35233-35605 while the sup­port lev­els are placed at 33354-32483.

The re­trace­ment lev­els of the rise from 22494 to 38989 are placed at 32565-30680-28716.

Ex­pect 32483 to be tested in the near-to-short-term with volatil­ity.

In May 2014 when the NDA gov­ern­ment came to power, the Sensex closed at 24217. Sub­se­quently, it reg­is­tered a high at 30024 in March 2015 and fell to 22494 in Fe­bru­ary 2016. The low­est level reg­is­tered by the Sensex un­der the cur­rent gov­ern­ment’s ten­ure till now is 22494. The ma­jor higher bot­tom on the monthly chart is at 32483, which can be tested. If the Sensex closes be­low 32483 on a monthly ba­sis at the end of Oc­to­ber 2018, it could slip fur­ther to 30024, 29077, 25717 and 22494. If 32483 is vi­o­lated on a monthly clos­ing ba­sis, then it could slide fur­ther to 22494 in 2019.

The next few weeks will be crit­i­cal for the mar­kets and will have an im­pact on the monthly chart.

A pull­back from 32483 may take place for a rise to­wards 36443. Cross­ing the top of 38989 looks un­likely but if the mar­kets re­cover from 32483, a pull­back rally for the ‘b’ struc­ture or ‘right shoul­der’ could de­velop.

BSE Mid-Cap In­dex Weekly chart:

An over­all weak­ness will con­tinue be­low 13538 and re­sis­tance will be at 14239-14708. An up­side move­ment is likely above 14708 clos­ing. Till then, ex­pect re­sis­tance and sell­ing pres­sure to con­tinue.

BSE Small-Cap In­dex Weekly chart:

The re­sis­tance lev­els are placed at 14272-14562 while the sup­port lev­els are placed at 13792-13396. There is a pos­si­bil­ity for a re­ver­sal above 14751. Till then, use the rise to exit long.

Strat­egy for the week

Exit long and sell on a rise to the weekly re­sis­tance lev­els of 34687-35233 with a stop loss of 35610. Ex­pect the lower range of 33763-32303 to be tested. Sup­port of 32483 can be crit­i­cal for the monthly chart and it could be tested in the near-term.

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