Markets in the new Resistance Zone

The markets, as expected, crossed the 18,000-mark during the week, all due to a solid start. Despite Thursday’s weakness, the markets were able to extend gains for the ninth straight week.

The Sensex touched a high of 18,048 in the middle of the week. Thereafter, it corrected and ended with a gain of 241 points at 17,933. In the process, the index gained 12.7 per cent (2,017 points) at 17,933.

Going by the current trend, it seems the markets are likely to start the week on a positive note, however, the second half of the week could see selling pressure. The nine-week rally may end this week, if the index is unable to sustain above 18,050.

The momentum indicators on the weekly charts are indicating tiredness, and we may see net losses, albeit marginal, next week. The index is likely to face considerable resistance around 18,075, above which it may spurt up to 18,150. On the downside, the index is likely to find support around 17,790-17,700. A break of 17,700 could trigger significant selling during the week.

The NSE Nifty moved in a range of 109 points, it touched a high of 5,400 and a low of 5,290. The Nifty finally settled with a gain of 71 points at 5,362.

The Nifty is likely to face considerable resistance around 5,432, which is the higher end of the Bollinger band on the weekly charts. The daily chart indicates resistance around 5,407. Bulls should continue to have the upper hand, as long as the index sustains above 5,400. On the negative front, selling pressure may intensify when the index slips below 5,320.

Weekly gains in Nifty continues

On April 01, 2010 Nifty closed in green today, preventing a negative weekly
close—thereby keeping hopes alive for the bulls and testing
the patience of bears. The daily momentum continues to be
in a sell mode, whereas the hourly momentum has come into a
buy mode but trading below the zero reference line, thus
falling short of confirming that the trend has again reversed
on the upside. The market breadth has improved over the last
couple of days but the volumes continue to be low even after
the breakout from the high of the bearish engulfing candlestick
pattern formed on the monthly charts on the Sensex—this is
not a good sign. Nifty formed a hammer candlestick pattern in
Q3 and Doji star candlestick pattern in Q4 almost gaining
nothing in the six months. Nifty has formed a 5 wave declining
pattern on hourly charts in the fall since Tuesday and has
retraced almost 61.8% of its fall from 5330 to 5235. Going ahead,
the high of 5330 remains a crucial resistance and 5266 a crucial
support for if the index breaches 5266, it will slide sharply. So,
keep an eye on these two levels i.e. 5330 and 5266—the next
trend deciders. We continue to maintain our short-term bias
down with the reversal above 5330.

Nifty on hourly chart is trading above its 20 hourly moving
average (HMA) and 40HMA pegged at 5277 and 5276
respectively, which are now its short-term supports. The
hourly momentum indicator KST has turned into buy mode
and now trading below the zero reference line.

Nifty on daily chart is trading above its 20 daily moving average
(DMA) and 40 daily exponential moving average (DEMA) placed
at 5196 and 5028 respectively, which are now its short-term
supports. The momentum indicator (KST) has given a negative
crossover and trading above the zero line. The market breadth
was positive with 1,099 advances and 253 declines on the NSE
and 2,212 advances and 608 declines on the BSE.

The Nifty and Sensex were up by 41 points and 165 points
respectively.