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Edelweiss Technical Reflection (ETR)
§ Following the previous day’s selling activity, Nifty cracked sharply in yesterday’s session with a loss of 1%. The selling activity was consistent throughout the day as the key hourly moving averages were breached on good volume activity. Nifty has closed below the 6100 mark, shaking out the bullish traders. The index has reacted down from the upper trend line of the ascending trend channel (light grey / refer chart) and is most likely to test the short-term moving averages. Daily oscillators are showing mixed signals. Hourly oscillators had triggered a sell signal and are now approaching the oversold territory. Market breadth drooped sharply in favor of declining stocks. Nifty 50 stocks A/D ratio was weak at 1:3. The reaction from the 6160-6180 resistance cluster was much expected, but the magnitude of the decline has been surprising. Taking a lead from the oscillator behavior the decline looks like a corrective move of the rally from 5721 to 6181, with key trading supports at 6045-6020. The ‘double bottom’ reversal would remain valid as long as 6015 remains inviolate on a daily closing basis.
§ Once again the interest rate sensitive’s Banking, Realty and Autos shed the chunk of weight. Cap Goods and Metals shares too joined the bear feast. IT and FMCG continued to show resilience in a shaky market indicating underline strength. Bullish Setups: HCLT, DIVI, JSP, HNDL, ITC, TPWR, GAIL Bearish Setups: KMBH, ONGC, BJAUT, HH, BPCL
§ India VIX has moved above the 10-DEMA at 18, and on a close above 18.35 would confirm a pick up in vols. Commodities have entered a difficult phase for traders with extreme intraday moves. Gold continues to trade above $1353, holding on to the uptrend, despite a triple top pattern at $1425. European and US indices have improved on the early loss displaying resilience in the uptrend.
§ Interesting chart setups: HCLT, DIVI, ITC, BJAUT
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