CNX-Bank Index-Technical View For The Week Starting From-4-8-14

CNX-Bank Index closed at 15127.80 on 1-8-2014

Range for the week ended 1-8-14 was :-15499.50---15096.

Range for the month ended on 31^st July-14 was :-15626.90—14338.65

SUPPORT: - 15096.10 / 15089.30 / 14933 / 14858.90 / 14857.50 / 14709.30 / 14338.65 / 14063.60 / 13414.30. 

RESISTANCE: -15137.60 / 15267.60 / 15499.70 / 15568.05 / 15592.80 / 15626.90 / 15725.80 / 15742.05/ 15930 / 16308 /.
 (Figures in bold are important)

Index opened firmly for the week under review but could not cross the previous week’s high of 15626.90 and then gradually moved down and gave a sharp down move on 1-8-14 and made a low for the week at 15096.10 before closing the week near the low point at 15127.80.The entire week’s movement shows great weakness in it and it may head for reasonable to big fall in coming days. It is needless to mention here that the index has been grossly under- performing off late in comparison with nifty.

TECHNICAL VIEW

1.ON DAILY CHART:-It has decisively broken the short term DMA range which is between 15482—15181(it changes every day) for 4-8-14, until and unless it moves above the short term DMA and stays further sharp fall can be expected. I suggest to avoid long call  below 15267.60 on 4-8-14.In fact think of  long trade above short term DMA range only.

2.ON WEEKLY CHART:-  It is badly placed on the weekly chart also which is very disturbing. It is below the upper band of the short term DMA range which is between 15144—14202 for the next week, which shows gross weakness in it and indicate further fall if it stays below this. I suggest avoiding long call below 15137.60 & 15096.10 for the week starting from 4-8-14.

The strong negative divergence are visible and if it comes into play then it could take index down to 12842 & 12551  levels but as I always say that divergence should be viewed in sync with the moving average placements and since it has decisively broken the averages on the daily chart and the upper band of the average on the weekly chart too therefore chances of divergence coming into play looks very strong. The divergence could only be negated if it bounces back above the short term DMA range on the daily chart. The divergence suggest caution in the long trade.

3.ON MONTHLY CHART:- The short term DMA upper band exist at 13867. I suggest to avoid long call below 15137.60 & 15267.60  for the month of August-14.

REMARK:- Long term trend is still up, but avoid long calls below 15267.60 and below 15127.80 & 15096.10 for sure till index shows the visible sign of down correction completion. I expect the down correction to last for some time and the possible down side range could be in the region of 13500---14000, therefore  one can try short call on the rise at appropriate levels with an adequate stop loss.

Kindly note that make your cost your stop loss in favorable trade and then trail it as the price move up/down to gain maximum profit and avoid losses. Use support and resistance levels as entry, exit, target and trailing stop loss points. DO NOT TRADE WITHOUT STOP LOSS

Note: Price stated here is of spot market

Contact me for strategic guidance to enter and exit the trade