The markets ended on a negative note for the third straight week, despite Friday’s surge. The Sensex was down 1.6 per cent (280 points) at 17,729. The index has broken the S1 and S2 (S = support) levels on the yearly chart. So far the index has touched a low of 17,296 as against the S3 level of 17,125.
However, the bears will continue to dominate proceedings unless and until 18,425 is not conquered for three consecutive days. Hence, if we do get a pull-back, which looks likely at the moment, it may be limited till such time that 18,425 gets conquered.
Next week, one can expect to see the Sensex take support around 17,400-17,180, while on the upside it may rally up to 18,070-18,275. One can look to trade with a positive bias, as long as the index does not break 17,180, and look for a positive week-on-week close.
The NSE Nifty touched a low of 5,178, and then rebounded sharply to end at 5,310, down 86 points for the week. The S3 level for Nifty is at 5,100.
It may be noted that below 5,100, the next key support for the Nifty lies at 4,780, the May 2010 low from where the up move started. So, that will account to 100 per cent Fibonacci retracement. Currently, we have retraced over 61.8 per cent, which was around 5,378. So now on our way up, 5,378 becomes the first hurdle above which the index may face major resistance around 5,560.
Incidentally, 5,560 looks like a major resistance because not only was it the 50 per cent retracement of the 2010 bull run, but is now also 38.2 per cent retracement of the January-February fall.
Next week, look for support on the Nifty around 5,210-5,150, while resistance could be around 5410-5470.