Wkly Tech Analysis: Up move may halt around 18,500

The fight between the bulls and bears was at its best during the week. The bears won the first round by hammering the markets at the start of the week. However, the bulls avenged, and left the bears in lurch with a strong three per cent gain on Friday.

The Sensex began the week with a two per cent fall, as the BSE benchmark index almost revisited its February lows.

The index touched a low of 17,314 in intra-day trades.However, after a mid-week consolidation the bulls gathered strength, the markets recouped losses and rebounded into the positive zone.

The Sensex rallied to a high of 18,269 - up 955 points from the week’s low. The index finally settled with a gain of 2.1 per cent (370 points) at 18,241.

Among the index stocks - Hero Honda surged almost eight per cent to Rs 1,866. HDFC, Mahindra & Mahindra, Infosys, Wipro, Larsen & Toubro, State Bank of India, Bajaj Auto, ICICI Bank, ONGC and Bharti Airtel rallied three-four per cent. On the other hand, Reliance Infrastructure slumped nearly nine per cent to Rs 530. Maruti Suzuki, DLF and Jaiprakash Associates were the other major losers.

As per the monthly Fibonacci charts, the Sensex after a sell signal has recouped smartly.

Now, there could be two possibilities. One, some profit-taking would take the index lower to 17,940-odd levels, where the it could find support and restart its upward journey for possible upside targets in excess of 19,000.

Two, which looks more likely, the market rises, and the Sensex faces resistance around its recent high in the range of 18,500-18,670, and then slips again to the lower levels.

To sum it up, one can expect a trading range of 17,940-18,500 during the week, a break in either direction could be positive or negative, depending upon which side we break.

The NSE Nifty moved in a range of 282 points, from a low of 5,196 the index rallied to a high of 5,478, and then settled with a gain of two per cent (105 points) at 5,471.

Despite the near three per cent rise on Friday, the Nifty remains in a bearish trend. The gap-up opening at 5,330 is now the key reference point going ahead. While the Stochastic Slow and relative strength index have turned positive on the daily charts, but the moving average convergence divergence continues to signal weakness both on the daily and weekly charts.

The key support for the Nifty, next week, would be around 5,390, below which the index can slip to 5,365-5,300 levels. On the higher end, the index may face resistance around 5,580-5,650.