Traders short on the Sensex and index related stocks may keep the stop loss at 19800. If the opening is above 19100 and the Sensex falls below 19100, then sell with the high of the day as stop loss or 19800 whichever is higher, says Technical Analyst, Hitendra Vasudeo.
Technical Analyst, Hitendra Vasudeo:
Last week, the BSE Sensex opened at 19496.25, attained a high at 19742.41 and fell to a low of 19289.69 before it finally closed the week at 19317 and thereby showed a net fall of 151 points on a week-to-week basis.
We had suggested to sell on a rise to 19524-19666 against this we saw a high of 19742 which later fell to a low of 19289. Traders who managed to sell at 19524 or above during the week benefited. If the same strategy was applied on the Nifty, traders would have booked repeat profits.
Weekly support will be at 19156 and 18704 while weekly resistance will remain at 19449, 19609 and 19800 levels.
A trend-line and channel breakdown has been witnessed. Therefore, a correction of the last corresponding rally from 15748 to 20203 will be seen. The 23.6% and 38.2% retracement of the last corresponding rise is placed at 19149 and 18534 respectively. The balance 50% and 61.8% retracement levels are placed at 17972 and 17448.
Stochastic, which is fast to react to price has hit the oversold zone whereas the RSI exited the overbought zone and is falling. If the Stochastic exits the oversold zone, a pullback may emerge to create a lower top against 20203.
A fall and close below 19100 may extend the slide towards 18534, 17972 and 17448.
BSE Mid Cap Index
A rise and weekly close above 6800 can mark a reversal of the correction.
BSE Small Cap Index
A rise and weekly close above 6850 can mark a momentary end to the correction. Support at 6336 and 6132 will be tested and if a recovery is seen in small caps, then it will be from either of these support levels.
Weakness would continue below 19100.
Strategy for the week
Traders short on the Sensex and index related stocks may keep the stop loss at 19800. If the opening is above 19100 and the Sensex falls below 19100, then sell with the high of the day as stop loss or 19800 whichever is higher.