WEEKLY TECHNI VIEW

Sensex : we expected a correction from around 78.2% in sensex and as one can read comments on sensex chart we said that the correction can be a good buying opportunity at supports if it remains slow and not steep but the correction was very sharp and as a result of that we produced intraday sell calls not much buying was advised.
Sensex has halted at 61.8% of last rise but it will be a temporary halt and any short term rise should be used to sell only.
And looking at daily close on Monday we strongly feel that the double bottom pattern is no more a valid pattern.



Nifty:
Nifty has also seen a very steep and drastic fall especially on Friday.
And the fall on Friday was severe in most of the sectors and even it/auto/pharma were not spared in the fall and we feel that this a true bad sign for nifty.
Nifty took support at 61.8% on closing basis and now below 5890 nifty has support only at 5818 and on any day a close below 5795 will start creating panic and markets will enter a real bear phase.

weekly tech view :::

General technical view for the week ended 070111:

On the weekly chart book of 37^th December we said this :

“

 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 eeks 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.”

And for nifty our comments were like this :

“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% up move 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 up move up to 6197 at least .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.

Despite having signs of double bottom pattern on daily chart because of weakness in broader market we were not convinced about the latest upmove we had clearly shown our apprehension and we had given a nifty target of 6194 and said that from this level around market will see selling pressure and from 3^rd jan 2011 itself through our daily technical view we warned about impending correction.

On a nifty chart we also said that we  can enter long only if the coming correction remains slow and not steep.

But especially on Friday no supports worked and both sensex and nifty just halted at their 61.8% retracement levels but on weekly charts both index completed a bearish engulfing pattern so any rally in first few days of the week should be used to exit longs and create short positions.

Sensex :

Sensex has closed the week on a strong bearish note by closing 1t 19691 and below 19980 it has completed a very strong bearish candle reversal pattern called bearish engulfing this pattern can have severe implications and this pattern can easily drag sensex in to completing a lower top –lower bottom formation on weekly charts.

As commented on chart and repeated in our technical views a close below 18954 will create panic among bulls and once sensex enters the channel it has support at 17340 which is the current value of its 89 week ema.

Technically any rise  in coming week should be selling opportunity and more shorts can be created below 18954 in coming days.

The stochastic momentum indicator is on the verge of giving a cross below its trendline supports on the weekly chart which will be another bearish sign

Nifty : it will be the first time after a brief break of weekly lows in early july-2009 that nifty will break its lows decisively and complete a lower bottom on weekly charts in the entire rally started from march -2009.

Still the trendline of the weekly channel is a support but as suggested earlier any recovery now will have to start with a strong candle reversal pattern on daily chart and to encounter the bearish force that we have seen on Friday we need a 400+ rally for sensex or a 100+ points rally in nifty on a day to encounter that big a bearish candle which we had seen on Friday and until that happens remain bearish even for short term.

The lows that nifty made on 13^th December were termed by us as trend decider level for the month of December and January and that level remains the trend decider level even now.