CNX-Bank Index-Technical View For The Week Starting From-11-8-14

CNX-Bank Index closed at 14765.75on 8-8-2014

Range for the week ended 8-8-14 was :-15343.50---14709.10.

SUPPORT: - 14709.30 / 14338.65 / 14063.60 / 13414.30. 

RESISTANCE: - 14857.50 /14858.90 / 14933 /   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 on a positive note for the week under review but could not cross the previous week’s high of 15499.50 and made a high of 15343.50 for the week and then gradually started moving down and gave a sharp gap down move on 8-8-14 and did not made any effort to fill the gap during the day and made a low for the week at 14709.10 before closing the week near the low point at 14765.75.The entire week’s movement shows great weakness in it and it may head for reasonable to big fall in coming days, technically fall looks inevitable. It may try to fill the gap in next 2-3 days and may come to 14960 level , so I suggest to sell on the rise buying is completely ruled out as of now.

TECHNICAL VIEW

1.      ON DAILY CHART:-It has already decisively broken the short term DMA range , so one can expect it to bounce back from 14660 level , if it does not hold this level and stays below this then it will find support at 14338.65 & 14063.60 below this it will head for steep fall .Index has to stay above the upper band of the short term DMA range to think of initiating a long trade. The short term DMA upper band is at 15192(it changes every day) for 11-8-14, therefore I suggest to avoid long call completely and below 14709.10 & 14660 for sure. Technically it is sell on the rise market as of now.

2.      ON WEEKLY CHART:-  It is showing gross weakness in the weekly chart also which is highly disturbing and indicating reasonable to big fall in the coming weeks. Furthermore it is also below the upper band of the short term DMA range which is between 15125—14257(for the next week) which is a very weak sign and it  indicates further fall if it stays below this. I suggest to avoid long call completely and below 14765 & 14709 for sure for the week starting from 11-8-14.

The strong negative divergence are visible and if it comes into play then it could take index down to 14447.20,12842 & 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 upper band of the short term DMA range on the daily chart first. The negative divergence suggest caution in the long trade. Technically it is a sell on the rise market.

REMARK:- Long term trend is still up, but since index is in correction mode ,therefore avoid long calls now and below 14660 for sure till it shows the visible sign of down correction completion. I expect the down correction to last for some time and index will seek lower levels and may come down in the region of 13850-14200, therefore now 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

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