Sensex closes at 18774 - Angel Broking

On Friday, our benchmark indices opened with a marginal downside gap in line with global markets and drifted lower to post a low of 18615 / 5616. However, decent buying interest near day's low eventually pushed market higher to close with very nominal gains. The IT, Teck and Auto counters supported the bulls, whereas Metal and Realty sectors remained under pressure throughout the session. The advance to decline ratio was strongly in favor of declining counters. (A=946 D=1381) (Source-www.bseindia.com)

Formation

- The '20-week EMA' and the '89-Week EMA' are placed at 19303/ 5850 and 18456/ 5585 levels, respectively.

- The '89-day EMA' and the '200-day SMA' are placed at 19378/ 5872 and 19167 / 5812, respectively.

- The weekly 'RSI-Smoothened' oscillators, the 'ADX (9) indicator and '5 & 20 EMA' are now signaling a negative crossover.

- The 78.6% Fibonacci retracement level of the rise from 18144 / 5477 to 20444 / 6230 is placed at 18636 / 5638.

Trading strategy:

This was the fifth consecutive week that ruled in favor of the bears. The negative developments on the global as well as domestic front have significantly dampened trader sentiments. Looking at the weekly chart, it is clearly seen that our benchmark indices are now hovering around the lower end of an upward sloping "Channel" pattern. Moreover, it is also trading marginally above the weekly '89 EMA' placed at 18456 / 5585 levels. Hence, 18615 - 18456 / 5615 - 5585 levels may act as a strong support zone for our benchmark indices. However, on the weekly chart, we are observing that the 'RSI-Smoothened' momentum oscillator, the 'ADX (9)' indicator and '5 & 20 EMA' are negatively poised. The impact of these technical evidences would be seen if indices sustain below the lower range of 18456 / 5585.

In this scenario, the negative momentum may get reinforced and indices may fall towards April lows of 18144 / 5477. On the flipside, only a sustainable move beyond last week's high of 19384 / 5863 would negate this hypothesis. Considering the ongoing weakness in the Rupee and global scenario, we advise traders to stay light on positions and trade with strict stop losses.

Source : Equity Bulls

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