Technical Research | August 16, 2011
Daily Technical Report
Sensex (16840) / Nifty (5073)
Our benchmark indices opened with a marginal upside gap
Exhibit 1: Sensex Daily Chart
but could not sustain at higher levels as immense selling
pressure led indices to give a close in negative territory.On
the sector front IT ,Teck and Banking counters were among
the major losers. The advance decline ratio was in favor of
declining counters (A=1257 D=1569). (Source
-
Gap Area
Formation
• On the Weekly chart, we are observing a “Horizontal
Trend Line” resistance at 17300 / 5180 level.
• The ADX (14) line has moved up from the last week’s
level of 18.50 to the current week’s level of 20.75 along
Source: Falcon
with - DI (Negative Directional Index) moving upwards.
• The Gap area formed on August 5, 2011, in the range
We advise traders to stay light on their positions and
of 17360 to 17665 / 5230 to 5325 would prove to be a
trade with proper stop losses. Investors can use the dip
towards
4800 to enter (partial buying advised) in
crucial resistance in the near term.
counters with strong fundamentals and good long-term
prospects.
Trading strategy:
Markets opened with a huge downside gap as negative
sentiments continued to sway across global markets. Due to
extreme pessimism, our benchmark indices did not even
manage to cross last Friday’s high of 17358 / 5230 and
collapsed to test the support level of 16650 / 4950. We are
now observing a “Horizontal Trend Line” around 17300 /
5180 level, which may act as a strong resistance in the
coming trading sessions. This horizontal trend line, coupled
with the low of the gap area, is now expected to act as a
strong resistance zone for the markets. This resistance band
is at 17300 - 17360/ 5180 - 5230 levels. As a result, the
trading range for indices in the coming week is expected to
be from 17300 to 16430 / 5180 - 4945. If indices manage
to cross 17360 / 5230 level, then they are likely to rally
towards the next resistance level of 17665 / 5325. A
violation of 16430 / 4945 level along with the ADX line
rising above 20 -21 level may attract immense selling
pressure, which can drag indices to lower levels of 16000 /
4800.
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Technical Report
RESEARCH TEAM
Shardul Kulkarni
Head - Technicals
Sameet Chavan
Technical Analyst
Sacchitanand Uttekar
Technical Analyst
Mehul Kothari
Technical Analyst
Ankur Lakhotia
Technical Analyst
Research Team: 022-3935 7600
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