Edelweiss Technical Reflection (ETR) 24 Jan 2011

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Edelweiss Technical Reflection (ETR)

§   The two weeks of sharp decline was brought to a halt in the previous week with a positive weekly close. In the previous session Nifty traded in an absolute dead range oscillating around the 21 hourly EMA. On the whole the index is holding above the crucial 200-SDMA at 5614. Momentum oscillators on the daily charts have turned sideways and the same on weekly charts have halted the slide. The market breadth inched marginally in favor of advancing stocks; while Nifty 50 stocks A/D ratio was weak at 1:2. Going into the crucial eventful week, the course of index direction is likely to be decided. Volatility should be on the rise which could mean a choppy trade is expected. The 5600-5615 band is likely to support the Nifty and drive it towards the 5835 (21-DEMA) target.

§   Trend among sectoral indices was mixed as the Technology pack witnessed profit taking, along with FMCG and Metals shares. The weaker Banking and Oil & Gas shares held up with gains sub 1%. BSE Realty Index chart setup signals a counter trend relief rally upto ~6%. Short-term setup on CNXBANK has turned bullish with a ‘piercing line’ candlestick pattern on weekly chart. Bullish Setups: POWF, BOI, SBI, REC, IBREL, SAIL Bearish Setups: HH, DRRD, ACEM, WPRO

§   DXY has dropped for the second week in a row as the momentum oscillators roll bearish. Decline towards 77.75 seems a high probability. Similarly the EUR has closed above the 200-SDMA on a weekly basis with an eye on 1.38 in the coming week. Gold has closed below $1350 with the price / momentum setup calling for a drop down to $1265.

§   Interesting chart setups: PLNG, POWF, IDBI, HH, ACEM, DRRD