Swings be­tween 34400 and 37000

Money Times - - Trading On Technicals -

Side­ways volatil­ity con­tin­ued on the daily and weekly charts. The Sen­sex closed in op­po­site di­rec­tions on al­ter­nate weeks since 30-11-2018.

The volatil­ity band is 34400-37000.

Last week, the Sen­sex opened at 36239.55, reg­is­tered a high at 36285.46 and fell to a low of 35382.07 be­fore it fi­nally closed the week at 35695.1 and thereby showed a net fall of 381 points on a week-to-week ba­sis.

Daily Chart

The daily chart shows os­cil­la­tion around the DRV af­ter the Sen­sex crossed the high of the last few days. The Sen­sex has formed ten swing tops and bottoms since the first week of Novem­ber 2018. The daily chart has a crit­i­cal trend line from 34426 and 35010. The trend was tested on Fri­day and re­cov­ery closed higher.

A fall and close be­low 35382 on the daily chart will lead to a break­down of the head and shoul­der pat­tern to con­firm the end of Wave ‘b’ struc­ture and re­sump­tion of Wave ‘c’ struc­ture. Con­trac­tion of move­ment af­ter the re­cent volatil­ity may be hap­pen be­fore a mo­men­tum based di­rec­tion, sur­faces.

Weekly Chart

A sharp volatil­ity swing on the weekly chart was wit­nessed in the last 5-6 weeks. Sus­tain­abil­ity above 34400 is crit­i­cal for the weekly chart. A break­out above 37000 is needed on the weekly chart. Till then, the wider band re­mains at 34400-37000.

The re­sis­tance lev­els on the weekly chart are placed at 35832-36194 while its sup­port lev­els are placed at 3560735470-35382.

A break­out above 36555 with a bullish can­dle could ex­tend the pull­back to­wards 37700.

A break­down be­low 35300 with a bear­ish can­dle could push the in­dex lower to 34945-33291-32483.

Yearly Chart

For cal­en­dar year 2019, the re­sis­tance lev­els for the Sen­sex are placed at 39216 and 45722 while its sup­port lev­els are placed at 35850, 32710 and 26204.

The year 2019 is likely to be good as long as 32483 is not vi­o­lated. The mar­kets even­tu­ally need a break­out and a sus­tained move­ment above 39200. As the Sen­sex nears the higher lev­els of 39000-39200, profit-book­ing pres­sure is likely to build up.

The min­i­mum up­side for the year 2019 is 39216, which could ex­tend to 45722 as long as 32483 is not vi­o­lated.

In the first 3-6 months of 2019, the Sen­sex may re­main range­bound be­tween the high and low reg­is­tered in

2018 i.e. 38989 - 32483.

BSE Mid-Cap In­dex

Weekly chart:

Weak­ness could re­sume be­low 14900 in the near term. A pull­back will con­tinue only above 15601 clos­ing. Cur­rently, the move­ment is side­ways be­tween 14900 and 15600.

BSE Small-Cap In­dex

Weekly chart:

The range of move­ment for the near term is 14856 - 14225. The next di­rec­tional move­ment is likely on a sus­tained move­ment out­side the band of 14856-14225.

Strat­egy for the week

Traders who are long can main­tain the stop loss of 35300. The re­sis­tance lev­els are placed at 35832-36194, which can be used to exit long and book prof­its. Broadly, as long as the Sen­sex does not cross 36555 on a weekly clos­ing ba­sis, the gen­eral ob­jec­tive should be to book prof­its.

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