What are the views of brokerages and technical analysts on where the support and resistances for the market lie?
On speaking to technical analysts, the consensus seems to be that the intermediate downtrend has been established. The Nifty did close below the 5,700 level yesterday. Many critical support levels have been broken. But the next major level to watch out for and all seem to be unanimous on this, is 5,470-5,475.
CLSA earlier today, gave out a target of 18,275 as the next major support on the Sensex. They said that below this, a typical head-and-shoulder pattern would be formed out. In simple words, a head-and-shoulders pattern would see a huge volume build-up at the initial peak, at the peak of the market, which is at 6,000 level on the Nifty or 20,238 on the Sensex.
We saw low levels of volumes, so if this statistical support level of 18,275 is broken, a head-and-shoulders pattern may emerge, which would lead to a further downside of about a 1,000 points, where the next major support would emerge.
Technical analysts say that 5,475 would be the critical support level; 5,462 is the low of today and intermediate support levels have been broken at about 5,530.
Technical indicators like the RSI have indicated a pretty oversold market and there may be some bounce back on short covering, but all these bounce backs must be sold into and profits must be taken.
5,600-5,650 are the next major resistance levels on the top and 5,700 is the key resistance level below which the market closed yesterday.
If one does want to participate in this market, largecaps would be the safest and best bets and stocks like Reliance, L&T, NTPC and Neyveli Lignite would be the choices.
Source: Moneycontrol.com
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