With the last phase of voting now left before the markets
react to Exit Polls on May 20 morning, markets
have gyrated between sharp fall and an equally impressive recovery over the past few days.
On Tuesday, benchmark indices snapped their nine-day losing streak, helped by gains in Reliance, ITC and State Bank of India to end a volatile session with gains. The S&P BSE Sensex ended the day 228 points, or 0.61 per cent, higher at 37,319, with Sun Pharma, Bharti Airtel, Vedanta, IndusInd Bank, and State Bank of India among the top gainers.
Here are trading strategies and key levels for frontline indices that you must keep a tab on:
S&P BSE Sensex:
A breakdown below the strong horizontal support of 38,555 has led to a correction below 37,000. The gap-up close range of 37,106 – 37,230 has been filled, suggesting the first sign of weakness. Now, the gap down range of 38,920 – 38,835 has become a strong resistance for the current trend. The level of 36,694, its 200 DMA, becomes the immediate support as the index is currently hovering around 100-DMA placed at 37,084.
The formation resembles “Head and shoulder” pattern with a clear breakdown. The RSI (Relative Strength Index) has turned up nearing oversold region - a sign of recovery. However, MACD (moving average convergence and divergence) is dipped below zero line indicating that the index may face selling pressure in the coming sessions. It needs to conquer 50-DMA, located at 38,070 levels convincingly to create a base for the next upside. CLICK HERE FOR DETAILED CHART VIEW
A straight fall of nine days, among which four sessions witnessed selling pressure over one per cent has dented the positive sentiment to a great extend. Volatility has climbed, as indices swing over 0.5 per cent from positive to negative territory in a single trading session.
Nifty has a formation of "Head and Shoulder pattern" that is likely to take support around 100-days moving average (DMA) located at 11,130 levels. To see a turnaround, it needs to conquer 11,350 with decent volumes. If it does that, then the next resistance falls at 11,500. Once this is achieved, the index can then rally towards its new lifetime high of 11,856 levels.
At current juncture, 11,130 looks a support. A major weakness or heavy sell-off is expected only if 11,000 is broken decisively, chart pattern suggests. The next support comes at 10,800 and 10,730 levels. CLICK HERE FOR DETAILED CHART VIEW
A 'Double Top' in the daily chart could see the index rest around the gap up level of 28,150, little above is 100 DMA located at 28,230. The 29,000 to 29,300 level seems a pressure range, which may stay so for the coming sessions.
Normally in a trending market, when a negative chart pattern gets formed on the higher side of the trend, then one needs to be cautious on a bigger outlook until the pattern holds ground. The upside reversal slows down, buying momentum starts deteriorating and volumes tend to wait for a confirm outlook. CLICK HERE FOR DETAILED CHART VIEW