Sen­sex to test lower top of 35605

Money Times - - Trading On Technicals -

Last week, the Sen­sex opened at 33549.87, made a low at 33341.80 and moved to a high of 35190.19 be­fore it closed the week at 35011.65 and thereby reg­is­tered a net rise of 1,662 points on a week-to-week ba­sis.

Daily Chart

A re­cov­ery was wit­nessed from the lower sup­port level last week. Now, ex­pect the lower top of 35605 to be tested in the near-term. A break­out and close above 35605 with a bullish can­dle could re­sume the re­trace­ment of the fall from 38989 to 33472. The re­trace­ment lev­els are placed at 35472, 36162 and 36832. Cross­ing the lower top at the end of the week on a clos­ing ba­sis is im­por­tant as we may wit­ness a change of se­quence in the lower top and lower bot­tom for­ma­tion in the fall from the peak of 38989 to 33742. Sup­port lev­els on the daily chart are placed at 34649-34303.

A fall and close be­low 34300 could trig­ger the down­ward move­ment again where-af­ter it could test back the last bot­tom of 33291.

Weekly Chart

A strong weekly rise of 1,662 points cov­ered 78.6% of the fall from the high of 35605 in the last 4 weeks. The re­sis­tance level of 35605 may be tested. Higher range for the week is 35687-37535. The sup­port lev­els are placed at 34514-33838. The de­mand zone of the last ma­jor swing bot­tom is 3337132483. Lower range has a lot of sup­port for re­cov­ery and even if a gap down is wit­nessed re­cov­ery will be seen un­less 32483 is

vi­o­lated. The is­sue that crops up post re­cov­ery is sus­tain­abil­ity in the higher range.

A break­out and close above 35605 is es­sen­tial to trig­ger a pull­back or mark a ma­jor re­ver­sal to test the peak of 38989. Pull­back re­trace­ment lev­els of the fall from 38989 are placed at 35472, 36162 and 36832. If a fol­low-up rise to last week’s re­cov­ery is wit­nessed, then a rise to­wards the 61.8% re­trace­ment i.e. 36832 can be wit­nessed in the near-toshort-term.

A break­out is es­sen­tial as the fail­ure to sus­tain at the higher range could trig­ger the down­ward move­ment once again. The in­dex may at­tempt to test 35605 to mark a re­ver­sal.

BSE Mid-Cap In­dex Weekly chart:

The re­cov­ery on the BSE-Mid Cap in­dex was good as it reg­is­tered the high­est clos­ing of last 4 weeks. Ex­pect the rise to test 15287 and 15674. The rise was huge last week. There­fore, an in­tra-week cor­rec­tion to test the sup­port of 14602-14153 will be wit­nessed.

The BSE Mid-Cap In­dex will at­tract sup­port at the lower lev­els un­less the fall is sharp and ver­ti­cal. Lower lev­els will at­tract ac­cu­mu­la­tion in mid-cap stocks.

BSE Small-Cap In­dex Weekly chart:

The BSE Small-Cap in­dex rise was com­par­a­tively weak in re­la­tion to the BSE Mid-Cap in­dex. The re­sis­tance of 14751 will be tested. A fur­ther break­out above 14751 is es­sen­tial. Weak­ness may re­sume be­low 13396.

Strat­egy for the week

Traders short can main­tain the stop loss at 35606.

Cover short po­si­tions at 34514 or be­low as and when the op­por­tu­nity arises.

A re­ver­sal is above 35605 and if the Sen­sex closes above this level, then long po­si­tions can be added. Con­trar­ian long po­si­tions can be un­der­taken at 34514-33838 with a stop loss of 32483. Af­ter test­ing the sup­port of 32483 in the last cou­ple of weeks, the Sen­sex has bounced back to test the lower top of 35605.

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