See further weakness if Sensex falls below 19100: Vasudeo

By Hitendra Vasudeo

Last week, the BSE Sensex opened at 19517.58, attained a high at 19723.09 and fell to a low of 19381.82 before it finally closed the week at 19468.15 and thereby showed a net fall of 16 points on a week-to-week basis.

We had suggested exiting long and selling on a rise to 19600-19786 last week. The high registered last week was 19723 but it closed lower at 19468. Traders who managed to sell at 19600 or above had the opportunity to gain during the week.

The rising channel has survived and no violation was yet seen. Support will be at 19325-19149. Weekly resistance will be at 19666-19865.

Weekly RSI exits the overbought zone and MACD cuts down its average, which suggests that the near term correction or sideways volatility may continue. The Stochastic is rushing into the oversold zone and the support could be tested with volatility.

Support may emerge around 19100. A fall and close below 19100 on daily and weekly charts may extend the slide and correction.

BSE Mid Cap Index

Expect the lower range of 6534-6441 to be tested with volatility. A rise and weekly close above 6800 can mark a reversal from the correction.

BSE Small Cap Index

Expect the lower range of 6420-6300 to be tested. A rise and weekly close above 6850 can mark a momentary end of the correction for the index.

Conclusion

A rise and close above 19724 may bring back the Sensex within the channel as show in the chart. A fall and close below 19100 will show a new breakdown for further correction.

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 falls below 19100, then sell with the high of the day as stop loss or 19800 whichever is higher. Sell on rise to 19524-19666 with a stop loss of 19800. Expect the lower range of 19325-19183-18984 to be tested.