Tug-of-war between bulls and bears to continue - Angel Broking

On Friday our Benchmark indices opened on a positive note in line with global cues. Subsequently, indices traded within a narrow range throughout the first half of the trading session. However, during the second half, we witnessed some selling pressure in our market. As a result, indices trimmed some of their early gains and eventually closed marginally in the positive territory. The FMCG, OIL & GAS and METAL counters traded with optimism; whereas the TECK & IT sectors remained under pressure throughout the day. The advance to decline ratio was marginally in favour of advancing counters. (A=1200 D=1135) (Source-www.bseindia.com).

- The '89-day EMA' and the '89-week EMA' are placed at 19329 / 5850 and 18500 / 5598 levels, respectively.

- The '20-day EMA' and the '20-week EMA' are placed at 19243 / 5805 and 19330 / 5851, respectively.

- The weekly 'RSI' and 'Stochastic' oscillators are positively poised.

- The 61.8% and 78.60% Fibonacci retracement levels of the fall from 20444 / 6229 to 18467/ 5566 are placed at 19689 / 5976 and 20021 / 6088, respectively.

- The weekly chart now depicts a 'Bullish Engulfing' pattern but the monthly chart shows a 'Bearish Engulfing" Japanese candlestick pattern.

Trading strategy:

The concluded week's price action can easily be described as a 'Tug-of-War' between the bulls and the bears. After a decent up move, indices came off sharply at the middle of the week and again retested early-week highs in the latter part of the week. The indices have closed marginally above the daily '89-EMA' level of 19329 / 5850. Also, we are observing that indices are hovering around the 50% Fibonacci retracement level of the fall from 20444 / 6229 to 18467 / 5566, which is placed at 19455 / 5898. During the week, indices confirmed the weekly 'Bullish Engulfing' pattern mentioned in our previous weekly report. The momentum oscillators on the weekly chart are positively poised. The impact of these evidences would be seen once indices sustain above this week's high of 19640 / 5904. In such a scenario, indices may rally towards the 61.8% and 78.6% Fibonacci retracement levels placed at 19689 / 5976 and 20021 / 6088.

On the flip side, this week's low of 19147 / 5760 would act as a key support level for the market. Any sustainable move below this level would trigger immense pessimism in the market. As a result, indices may go back to test 18925 - 18688 / 5700 - 5630 levels. In broader perspective, a move beyond the trading range of 19640 - 19147 / 5904 - 5760 would dictate the near term direction.

Source : Equity Bulls

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