WEEKLY TECHNI VIEW

General technical view :

As we all know technical analysis is a study of chart to identify turning points in markets.since October 2010 we have been suggesting that there are evidences of major top in our markets.

Now after reaching our first targets of around 19000 and 5700 for sensex and nifty respectively markets have gone in to a sideways phase since last 5 weeks we had identified a turning points of a short term up move by anticipating a double bottom pattern on daily charts but it is still unclear weather this double bottom pattern will lead markets to much higher levels.

Generally in a big bull markets such down move like we saw in November can easily turn out to be a corrective phase only but this time around the way small cap ,mid cap stocks ,psu stocks ,banking stocks ,power stocks have behaved in past one and a half months it seems that there are all chances of a larger correction but because of continued bull run in it stocks and pharma stocks sensex and nifty does not have the severity in fall.

So despite weakness in many sector indices unless sensex and nifty closes below their November lows we can not presume that thay have entered a large corrective phase.

This week being last week that ends a month,a quarter and also a year will have a crucial closing .

Nifty :

As we study  weekly chart of nifty it is quite evident that nifty has taken support at 8-13-21 week emas and as on weekly close it has entered back into the expanding structure on weekly charts this is very positive sign. The last weeks 1% upmove can trigger a break out of congestion zone  between 5690-6069 if it closes this week above 6069 but since 6088 is the 61.8% retracement level of the last major a close above 6088 can trigger an upmove upto 6197 atleast . this view is wee supported by the formation of double bottom pattern on daily charts.

Failure to close above 6088 or if nifty reaches 6197 and than face severe selling pressure it could be a lower top formation on weekly charts so for upside we have to watch 6088 and 6197 and set our trading strategy accordingly.

Sensex :

For sensex the corresponding levels to watch for this week are 20217-20280 above which there will be a bigger and faster upmove possible as once sensex crosses these levels there will be huge short covering and failure cross these levels and a close below 30321 will confirm a lower top on weekly charts for sensex.

We have to give both views this week because sensex has been a range since past five weeks so a close above these levels sensex will have bigger move on either side.

Bank nifty : daily chart.

Since banks were leading the last bull run we feel that a study of bank nifty at this important juncture when this week will end a month a quarter and a year is crucial.As shown on the chart with our earlier comments bank nifty has clearly formed a lower top lower bottom pattern on daily charts so now the falling trendline is an important resistance.

And on weekly chart of bank nifty as we have put our comments on chart the emas on bank nifty which generated strong buy calls in early 2009 are on the verge of giving sell cross if bank nifty can not give a significant upmove this week this sell cross will have significant bearish implications for medium term.

And even if sensex and nifty gets an upmove for sometime unless bank nifty have stronger upmove the rise in general markets will not sustain for long.