where is the top ?

AS    a technical analyst, its normally a great fancy to try and find out an EXACT top or an exact bottom, the  implications of trying hard to identify either a top or a bottom on day to analysis can be devastating though. So  , over the years I have learnt NOT  to go much deep into  putting too much effort into it, still the fancy remains and so  trying to collect and present some TECHNICCAL facts ,in an effort to  identify atleast an intermediate TOP of the great bull run.

After all,  if we can identify some good corrections NEAR THE TOP, the benefits for traders / investors can be immense.

A . FIBBONACCI  NUMBERS PRESENT IN THE RALLY SO FAR, ON DIFFERENT TIME FRAME CHARTS.

WE have seen some major market tops, near big IPO’S , in the past, THE COAL INDIA ipo is coming in later half of this month, and  ,

  1 )  first week of November will an 89^TH WEEK of the entire rally started  from march -2009. 89 being a fibonacci no. it will be an important juncture in doing time analysis.

2 ).the current  QUARTER is 8^TH  QUARTER , again 8 being a fibbonacci number, so this will be an interesting quarter to watch.

3) next Monday i.e. 18^th October will be 34^TH DAY of the last leg of an euphoric rally started from the sensex low of 17820, coincidently the same date has been fixed for the coal india ipo  !!!!!!!!!!

4) the biiger rally which started  from within the YEAR long channel,  which than broken out of channel  started from the sensex low of 15960 in the last week of may-2010, will have   its 21^st week , completed in the coming week of 11^th oct.

5) the month of November-2010 will be 21^st month  from march 2009,,21 being another fibbonacci number, it will have an interesting impact.

As, can be seen, from these mentioned TECHNICAL FACTS, the coming week/month and the  current quarter  all have  significant fibbonacci numbers present, as I have compared different legs of the  bull- market that we have been in.

So, expect atleast an important  intermediate top, in place around   later half of this month.

One must remember, that these are probable time-zones from where markets can turn down as a correction may start, but price wise for sensex the real confirmation would be 1-3 strong closes below 19771 and below 5932 for nifty.and as we study fibbonaci support levels, 5875-5888 for nifty has now become a very very strong level of support to watch,if there is a sustained downside move below 5875-5888 than only, one should think of any deeper corrections to set in. at present SLOW down moves  upto  5875-5888 should be considered as buying opportunities only.

2) 200 day ema

As shown in the sensex chart, the sensex has shown tendency to test  the all important 200 day ema, TWICE  and after taking support for two times in a row (resistance in down trend),it is seen to break the 200 dema.

In our case, sensex recently tasted the 200 dema in early feb-2010 and than in late may-2010,may be the time is due for the history to repeat itself.

3) mimicking ::it has been like a rule of thumb in doing technical analysis that HISTORY REPEATS ITSELF,chart patterns that one observe in one chart can be presumed to get repeated/mimmicked in same setup in other charts too. Weather it’s a stock or an indice.

When the rally started in march 2009 in india, there were many skeptics about the future of that rally,famous Elliot wave and neo wave theory followers world over predicted  DOOM for usa/Europe and even Indian markets, especially in feb-2010 and than in may-2010, markets throughout the world has proven them all wrong.

The primary argument of all those analysts was  based on an assumption that 2008 crash was some kind of an A WAVE , and the rally started in march 2009 was  B WAVE and LARGER  C WAVE crash is pending, which would asper them break  2008 lows, this scenario is preferred by most Elliot and neo wave practitioners, this is still possible for the world markets, but in our case sensex being so near of the  jan-2008 high, the picture seems different now.

Here, I want to show just one observation, that I have seen in ftse 100 chart(quarterly chart), as one can see here, the rally in sensex in 2003-2008 seems to have been developed like the rally in ftse100 before 2001 crash, THE crash in ftse100 in 2001 seems to have  been repeated in sensex in 2008 crash, what followed in ftse100 in 2003-2007 upmove is like what sensex has done in 2009-2010 rally, so, the crash that came in 2007-2009 for ftse100 is POSSIBLY yet to come in our markets.

AS , it is very clear that sensex is near its  jan-2008 pick, here, sensex can pick out, not being able to cross 2008 pick, OR if  in coming days sensex  crosses the 2008 high, than there will be buying euphoria and there will be some serious panic among BEARS,,  BUT as the saying goes, markets generally tops out when the LAST bear rushes to cover his shorts,so it will be very interesting to observe markets this month.

4 : retracement as support and channel (rectangle) target :

As can be seen on sensex chart ,since October-2009 to early sept-2010, it was moving in a channel ,which can also be called as a rectangle, the move within the channel was roughly of 2000 points,sensex broken out of the channel in early sept and has moved up by 2000 points , meeting the rectangle break-out targets.

Fibo. Retracements is an all important  technical tool used to find out supports /resistance levels.if we assume that looking at the present mood of the markets and money flow from the FIIS, IT IS ENTIRELY POSSIBLE THAT we may see 21200 level of sensex in coming days.if that happens and if we  calculate future fibbo retracements levels taking 21200 as the new high, one can see that the ONE YEAR LONG CHANNE L  , HIGH  and LOW ,BOTH becomes support  levels and also the big gap (after election 2009) area becomes one important fibbo retracement support level.

So ,concluding this article ,we can presume that one important top is nearby.

Tracking the possible top and confirming it using other technical tools, will be a job ahead.