Sensex Struggles to Take Out 65,000; What Lies Ahead?

  • Stock Market Analysis

After making a bottom of around 63,100, the broader market Sensex index witnessed a sharp recovery and rallied to over 65,000 mark in less than 9 sessions. Some of the credit can also be given to the improving sentiment in the global markets.

However, now the index seems to be struggling near the hurdle of 65K. Today is the third day, that investors have seen 65K on the screen but the selling pressure from the higher levels is keeping the index from closing above it.

Image Description: Daily chart of Sensex (spot)

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The resistance zone of 64,800 - 65,000 is holding its ground and creating a hindrance for bulls for the last couple of sessions. So, what could be done from here?

Firstly, the short-term trend is positive which can be gauged by the higher high and higher low (HH & HL) formation of the daily chart. In this essence, the downtrend will only begin once the index breaks below its preceding low, which is currently at 63,550.

Despite being in an uptrend, there is some weakness that is evident on the chart as the index has approached its resistance zone. High-risk traders who love to do mean reversion trading or in other words take contra bets can look for short opportunities from here. If the index dips from this resistance, the nearest support level is present at 64,450 which can be deemed as the first target for short positions.

Because this is a support area, long traders can look to enter here to participate in the short-term rally.


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