Retracement level under pressure: Hitendra Vasudeo

Technical Analyst, Hitendra Vasudeo:

Last week, the Sensex opened at 17407.66 and maintained the same as the high for the week. A gap down opening was a seen in relation to the previous week’s closing on 04/04/12. The week ended on 04/04/12 was short week of 3 trading days.  Weak global markets on 05/04/12 set the tone for the weak opening for the week that began on 09/04/12. Later, the Sensex fell to a low of 17027.30 to close the week at 17094.51 and thereby showed a net fall of 391 points on a week-to-week basis.

The weekly candle has been negative and the support of 17008-16920 will be under pressure, if we have weaker closing on Dow Jones Index on Friday night 13 April 2012. As a result of the negative candle, the objective may be to exit long on a rise to the weekly resistance of 17176-17325-17706. Weekly support will be at 16945 and 16564.

The retracements of the rise from 15135 to 18523 are placed at 16823 and 16423 which are 50% and 61.8% retracement levels. These levels may be tested considering the negative weekly candle and the lowest weekly closing on the current correction from 18523.

Conclusion

Retracement level of 16823 and 16423 will be tested. A rise and close above 17688 may mark a reversal. But till then, we may continue to see sideways volatility with support/retracement level to be under pressure.

Strategy for the week

Traders already long can maintain the stop loss of 16900. Use the rise to resistance of 17176-17328 and sell with a stop loss of 17500.  Sell on fall below 16800 with the high of the day as the stop loss or 17500, whichever is higher. Cover short position at 16500-15886-15500 as the opportunity arises.