Indian indices close weak - Angel Broking

On Friday, we witnessed a quiet opening on the back of flat Asian bourses. Subsequently, indices tumbled sharply on the back of immense selling pressure near all intraday resistance levels. As a result, indices corrected more than two percent during the session. The correction was mainly led by the Realty, Oil & Gas and Banking counters; whereas only IT sector ended in the positive territory. The advance to decline ratio was strongly in favor of declining counters. (A=791 D=1591) (Source-www.bseindia.com)

Formation

- The '20-week EMA' and the '20-day EMA' are placed at 19410/ 5874 and 19900/ 6041 levels, respectively.

- The '89-day EMA' and the '200-day SMA' are placed at 19443/ 5895 and 19048 / 5776, respectively.

- The weekly 'RSI' and 'Stochastic' momentum oscillators are negatively poised.

- The 'Bearish Engulfing' Japanese candlestick pattern on weekly chart is still intact.

- The monthly chart now depicts a 'Shooting Star' Japanese candlestick pattern.

Trading strategy:

This week, our benchmark indices traded with positive bias in four out of five trading sessions. However, the bears marred all bullish advances and have significantly damaged the overall chart structure. While moving higher during the week, indices faced strong resistance near the 61.8% Fibonacci retracement level of the fall from 20444 / 6230 to 19569 / 5936. This level was placed at 20256 / 6118, which almost coincides with this week's high. The 'Bearish Engulfing' pattern mentioned in our previous report is still intact. In addition, we are now observing a Japanese candlestick pattern on monthly chart which resembles a 'Shooting Star'. This pattern too is a bearish pattern but requires confirmation in the form of close below the low (19451 / 5910). This is also supported by the negative crossover in weekly 'RSI' as well as 'Stochastic' momentum oscillator.

Considering all these technical evidences, we are of the opinion that any sustainable move below 19568 / 5936 may trigger pessimism in the market and in the process; it would also confirm the monthly 'Shooting Star' pattern. In this scenario, we may witness a slide towards next support levels of 19360 - 19022 / 5850 - 5764. On the flipside, 19963 - 20254 / 6055 - 6134 levels would act as resistance in coming week.

Source : Equity Bulls

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