After 3 days of fall, much needed relief recovery for the markets today. Sensex went down 20 points(12832) below the 50% retracement (12852) of whole rise 12315 to 13386. Meanwhile, sensex had formed a kind of Island Cluster reversal pattern because it is consistently trading below the rising gap 12960-13070 created last week. This suggests the underlying weakness in the market. Todays recovery was aided by short covering in the last hour of trading due to F&O expiry for the march series. This was done by the strong performance by the heavyweights like ONGC, HLL etc.
Usually, in up-trending markets, the first target would be the previous high made. Our target should have been 13386 in this case. And in the first day of recovery, we would have crossed at least the 38.2% of the fall 13386-12832. This happens to be 13043. The 50% and 61.8% retracement are 13109 and 13174 respectively. Unless we cross 13174 convincingly, I doubt this pullback. We might be circling here itself until the Annual results are announced in April.
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