Wkly Tech Analysis: Expect a volatile week ahead

The week began on a positive note, with markets logging strong gains. However, the indecisiveness thereafter crept in and the markets drifted lower albeit in a slower manner. Eventually, the markets ended with marginal gains.

The Sensex after rallying to a high of 19,811, slipped into the negative terrain and touched a low of 19,388, down 362 points from the week’s high. The BSE benchmark index finally ended with a marginal gain of 31 points at 19,451. In the process, the weekly charts have seen a formation of Doji.

A Doji is formed when a particular stock/index open and close are either the same or very close to each other. It indicates indecision among market participants of a ‘tug-of-war’ between bulls and bears.

Technically, the weekly MACD has turned positive, and other momentum indicators like the RSI (relative strength index), ADX (average directional index) and the Slow Stochastic, too, are in the positive zone, albeit looking a bit tired. On the other hand, RSI and ADX are trending downwards on the daily charts, and the Slow Stochastic has turned negative.

So it seems like the ‘tug-of-war’ is likely to continue for some time, at the same time one can say that bears seem to have a slight advantage over the bulls. Given, the results season around the corner and a holiday-shortened week one can expect higher volatility in the markets.

The Sensex is likely to face considerable resistance around 19,570-19,600, while the index is likely to seek support around 19,300-19,225. As long as the index sustains itself above 19,200, one can expect some kind of consolidation in the markets. However, as and when the index breaks 19,200, one can expect a sharper fall to 18,700-odd levels.

The NSE Nifty moved in a 122 points range, from a high of 5,944 the index dropped to a low of 5,822. The index finally settled with a gain of 16 points at 5,842.

The Nifty, according to Fibonacci monthly calculations, seem to have hit resistance around 5,950, above which the index can potentially rally to 6,035. On the downside, the index has considerable support around 5,700.