Further weakness is below 17000: Hitendra Vasudeo

Technical Analyst, Hitendra Vasudeo:

Last week, the BSE Sensex opened at 17598.42, attained a high of 17691.96 and fell to a low of 17008.77 before it finally closed the week at 17503.24 and thereby showed a net fall of 133 points on a week-to-week basis.

The daily chart had tested the 200-day EMA and 200-day SMA. The 50-day average was also tested. The low registered on last Wednesday was 17008, which tested all these averages. The 38.2% retracement level of 17229 was also tested. On Friday, we saw gap-up opening and strong gains were seen. Due to a recovery in global markets on Wednesday night and Thursday helped to show strong gap-up opening on Friday.

As a result of the recovery on Friday, we witnessed a large lower shadow on the weekly chart suggesting support at lower level.

The upcoming week is an event driven week. Therefore, the low of 17000 would be crucial at the end of the week.
The pullback levels of the fall from 18523 to 17008 are placed at 17588-17766-17945. Expect the same to be tested in the upcoming week with volatility.  Ideally, the low of 17000 must not get violated on a closing basis on daily and weekly chart.

It is essential henceforth to cross 18523 or consolidate in the band of 18523-17000 in order to create ground for a pullback rise of the fall from 21108 to 15135. The level will be placed at 18827, 19831 and 20428.
Weakness will continue below 17000.

Weekly support will be at 17401-17110-17000. Weekly resistance will be at 17793-18477.

Conclusion

A fall and close below 17000 can accelerate the slide.

Strategy for the week

Weaker opening to 17401-17110 can be used for buying with a stop loss of 17000. Buy above 17700 with a low of the day as stop loss or 17000 to exit at 17793-18477. Sell on fall below 17000 with high of the day as stop loss or 17700, whichever is higher.