Angel Broking on Week Ahead: Time / Price-wise correction on the cards

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In our previous Weekly report, we had mentioned that as the
long as indices manage to hold 19730 / 5920 levels and cross
the high of the Shooting Star - 20707 / 6222 - then there is a
strong possibility of them testing all-time highs in the coming
weeks. The week began on a positive note and momentum on
the upside led the indices to cross the high of the Shooting Star
and register a fresh 52-week high of 20854 / 6284 where
profit booking emerged. The Sensex ended with net loss of
0.6%, whereas the Nifty lost 0.7% vis-à-vis the previous week.
Pattern Formation
􀂄 On the Daily chart, we are observing that prices are near
to the 20-days EMA (20087 / 6045 level). Normally, the said
moving average acts as a decent support. Hence, a bounce
from current levels cannot be ruled out (Refer Exhibit No.1).
􀂄 On the Weekly chart, after a Spinning Top, we are now
witnessing a "Shooting Star", which is a top reversal pattern.
The high of the Shooting Star 20854 / 6284 now becomes the
initial resistance for the market (Refer Exhibit No.2).
Future Outlook
The coming week is likely to witness a Time or Price-wise
correction. On the Daily chart, if the prices hold the 20-days
EMA (20087 / 6045), there is a possibility that the high of the
"Shooting Star" (20854 / 6284) could be tested. In this case,
we may witness sideways Time-wise correction/consolidation.
On the other side, if the prices breach and close below the
20-days EMA (20087 / 6045 level) we may witness a
price-wise correction. In such a scenario, the indices may test
the Fibonacci retracement levels of 19693 - 19328 / 5925 -
5814 of the entire up-move which started from 17819 to
20854 / 5348 to 6284 levels.
Traders should keep in mind that the expected
Time/Price-wise correction is a part of an uptrend and is
healthy for the market in the longer run.