Rally may continue above 19900: Hitendra Vasudeo

Technical Analyst, Hitendra Vasudeo:

Last week, the Sensex opened at 19820.56, attained a high at 19856.43 and fell to a low of 19596.38 before it finally closed the week at 19663.64 and thereby showed a net fall of 120 points on a week to week basis.

The next lower top is at 19811. The 78.6% retracement and 88.6% retracement of the fall from 21108 to 15135 is placed at 19811 and 20444 respectively.

The high registered last week was 19856 against the 78.6% retracement level of 19811. Subsequently, we saw a reaction during the week respecting the 78.6% retracement level.

Further rally may continue on a rise and close above 19900.

Support during the week will be at 19555-19294-19100. Weekly resistance will be at 19704-19900.

The RSI hit the overbought zone and reacted down last week on the weekly chart. The Stochastic is already in the overbought zone. The MACD is still above its average and the zero line, which suggests that the momentum may continue till further resistance is crossed, which is 19900.

BSE Mid Cap Index

BSE Mid Cap faced resistance at 7365-7491 and reacted down to close at 7156. The high registered was 7391. A further rally may continue above 7500.

If that happens then expect the rise towards 7896.

BSE Small Cap Index

Further rise above 7700 is required to expect the rally towards 8100 in near term to short term from the current level of 7454.

Conclusion

Rise may continue above 19900 after a minor correction/volatility.

Strategy for the week

Hold long positions with a stop loss of 19100.  Corrective dips to weekly support of 19555-19294 can be used for buying with a stop loss of 19100. Buy further above 19900 with the low of the week as stop loss or 19596, whichever is lower.