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Market Commentary
NIFTY finds support at 5850 - Angel Broking
Posted On : 2013-06-06 20:35:08( TIMEZONE : IST )
Yesterday, our benchmark indices opened with a downside gap on the back of overnight negative developments in US and European bourses. As a result, indices immediately slipped below yesterday's low but found a decent support around 5850. Post the initial hour of the session, indices managed to recover from their early losses and eventually closed on a flat note. During the session, the Banking and the Realty counters defended our benchmark indices; whereas the Health care and the Auto sectors remained under pressure throughout the session. The advance to decline ratio was marginally in favor of declining counters. (A=1140 D=1226) (Source-www.bseindia.com)
Formation
- The '20-week EMA' and the '20-day EMA' are placed at 19410/ 5874 and 19790/ 6000 levels, respectively.
- The '89-day EMA' and the '200-day SMA' are placed at 19443 / 5895 and 19086 / 5788, respectively.
- The current daily candle resembles a 'Spinning Top' Japanese candlestick pattern.
Trading strategy:
Despite a strong negative closing from US and European bourses, our benchmark indices managed to briefly pull back into the green in yesterday's session. Yesterday's low of 19395 / 5869 is marginally above the 50% Fibonacci retracement level (19294 / 5853) of the rise from 18144 to 20444 / 5477 to 6230. We have been observing that indices are reluctant to give a daily close below the mentioned 'Downward Sloping Trend Line' and the daily '89 EMA'. This support zone is seen around 19443 / 5895. Hence, we continue to reiterate our view that the possibility of testing further downside levels would open up only if indices close below 19443 / 5895. In that case, indices may slide towards 19360 / 5850 level.
The latest daily candle resembles a 'Spinning Top' Japanese candlestick pattern. An occurrence of such pattern near the support indicates uncertainty among market participants. Going forward any sustainable move beyond yesterday's high of 19636 / 5957 may push indices higher to test 19743 - 19790 / 5982 - 6000 levels. We advise traders to adopt a stock specific approach and follow strict stop losses.
