The Falling Wedge: Update: Outlook on Market & Stocks next week

Sensex gave smart gains last week and ended 1000 points higher over the previous week.

Next week will be the decider as uncertainty prevails on the further move.

1. The positive thing is that the prices have made gaps which is a bullish sign.

2. Also majority of stocks leading the sensex of Banking and IT have crossed over or sustained the popular support levels.

3. The technical concerns are the resistances placed at 18970 levels where the

200 DMA resistance will be tested. Also the prices are testing the channel resistance. Bollinger upper band touch is also made.

Still the markets are not in an oversold zone and the short term stochastic indicator indicates more gains in the coming week.

A move above 18970 on a closing basis may even take the sensex to 19400-19500.

A move down the channel (which is less likely but cannot be ruled out) can be dangerous creating a flag type of pattern if broken below 17900. A up shaping flag in a downward trending market is a continuing pattern.

Till these breakouts, its time to wait again.

On the individual front,

ITC can test historical resistance levels at 180 crossing which on closing basis can give a good trade. Also the 200 DMA support was sustained. Refer to the chart for details. The BSE FMCG index too shows bullishness. ITC can lead it towards more gains.

United Phosphorous seems to have bottomed out at 125.

The triple bottom indicates a very bullish sign. Also prices closed over the 50 DMA and also broke the neckline resistance of the channel.

Refer to the above chart for specifics.

REC also seems to have bottomed out at 207 levels.

The RSI Price divergence and MACD making higher bottoms seems to signal a trend reversal. Prices also made a double bottom at around 215 which is a bullish sign. Watch out for a breakout next week.