Early breakout above 19700 essential: Vasudeo

By Hitendra Vasudeo

Last week, the BSE Sensex opened at 19290.91, attained a high at 19520.50 and fell to a low of 19149.03 before it finally closed at 19242 and thereby showed a net fall of 75 points on a week-to-week basis.

On 3-weekly bars view, a swing top is made at 19612.18. A further rally may continue above 19700.

On a further sustained rise and close above 19700, expect the rise towards 19811, 20664 and 21108. The projection range is placed between 20400 and 21200. Correction during the week may be seen below 19100.

Weekly support will be at 19087-18715. Weekly resistance will be at 19458-19622-19830.

The retracements of the last corresponding rise from 18255 to 19612 are placed at 19091-18930-18769. It is essential that a further breakout and close above 18700 on the weekly chart is required. Otherwise, expect the retracement to be tested before making an attempt to move higher. A fall and close below 18200 may lead to a termination confirmation of Wave B of Wave C.

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The Weekly RSI indicator has still not hit the overbought zone whereas the Stochastic has. Therefore, expect a minor correction and volatility between the weekly support and resistance levels.

BSE Mid Cap Index

Further rise on the BSE Mid Cap Index may be seen above 7158. Support will be at 6900.

BSE Small Cap Index

Further rise on BSE Small Cap index may be seen above 7530. Support will be at 7270.

Weakness may emerge on a fall and close below 7200 in BSE Small Cap Index and 6900 on BSE Mid Cap Index.

Conclusion

It appears that the BSE Mid Cap and BSE Small Cap indices may show a near-term retracement and correction before making attempt to move above the recent peak or 2-week high.

Strategy for the week

Hold long positions with a stop loss of 18200. Correction to weekly support range of 19087-18715 can be used for buying. Further upside momentum may resume above 19700. Buy above 19700 with the low of the day as stop loss or 19100, whichever is lower.