Oscillators in the daily chart are in the neutral
zone but the negative divergence in the rate of change oscillator and relative
strength index imply that there is no momentum in the short term. Weekly price
rate of change oscillator dipping in the negative is worrying because it means
that the medium-term trend is under threat. We will, however, need to see how
this oscillator behaves next week to confirm this trend.
There is a bearish engulfing candlestick in the
weekly chart of the Sensex and the Nifty that is negative from a short-term
perspective. That both the indices are poised just above the 50-day moving
averages also means that they are at a critical point from a medium-term
standpoint.
SENSEX (20,851.3)
The short-term trend has reversed lower since the
peak of 21,304. Continuation of this trend can take the index lower to 20,568;
20,039 or 19,959 in the near term. Key support zone for the short term is
around 20,000. Investors can continue to buy during declines as long as the
index holds above this level.
It is only on a break of this support that the next
targets at 19,500 and 19,000 will come into play.
Short-term resistances are at 21,116 and 21,331.
Inability to move above the first resistance will mean that the index will move
lower in the near-term.
NIFTY (6,211.1)
The Nifty too, is in a short-term downtrend since
the peak of 6,415. Continuation of this downtrend can take the index lower to
6,130; 6,072 and 5,964.
It needs to be noted that the index is currently
poised just above its 50-day moving average.
A bounce from these levels can take the index to
6,288 or 6,360. Inability to move above the first resistance will be the cue
for short-term traders to initiate fresh short positions
.
Key short-term support for the index is at 5,922.
Fibonacci support as well as the presence of the
200-day moving average at this level, lends credence.
Short-term investors can buy during declines as long
as the index trades above this level.
Subsequent supports are 5,770 and 5,617.
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