General technical view:
If we have to describe the week gone by in a nutshell we can say “ the weakness is now being converted from smaller timeframe charts to larger one”.
We use candle patterns in analyzing markets as a one of the most important tools initially candle reversal patterns started to appear on daily charts then from the month of November-2010 there were candle reversal patterns on weekly charts but some how reversal patterns were not got completed on monthly charts even after huge sell off in the month of November in sensex-nifty but we used our observation of double candle reversal patterns and in january-2011 we have second reversal patterns on monthly charts and as described in details in the last weekly technical view now the reversal patterns have started to appear on quarterly charts.
And more importantly now as the bears are in full control of markets the positive bullish candlestic reversal patterns has simply stopped working in favour of bulls.
On 3rd jan,Thursday morning in our daily technical view we said that there will be a good chance of a short term upside rally if nifty closes above 5527 we said this because we had a few technical evidences that markets may produce an upside rally one was the oversold condition of stochastics on daily and weekly charts and the other was that nifty was some how holding 5416 which was our level mentioned in weekly tech report of 24th January .
Nifty completed a morning star pattern on daily chart on 3rd jan but closed at 5526.75 .
So not closing above 5527 and then could not sustain above 5527 on 4th jan and so the morning star pattern did not work.
We believe that we will have to have two candle stick reversal patterns on daily charts and then we may expect a relief rally and that too if 5337-5268 works as support in the coming week.
It can be painful to die hard bulls or long term investors to see such a massive erosion of the valuations of ones portfolio in a span of just three-four months but we would like to reproduce few lines of our technical view dated 11th October 2010 as we believe that now when nifty has closed at 5395 from a high of 6335 in the first week of November 2010 the job of doing technical analysis and identifying major turning point has been done in the most satisfactory manner on our side.
“ first week of November will be an 89TH WEEK of the entire rally started from march -2009. 89 being a fibonacci no. it will be an important juncture in doing time analysis.”
“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 “
“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.”
WHAT CAN BE THE FUTURE COURSE OF MARKETS ??
We had predicted 14000-15000 sensex target for the year 2011 in early January in our annual meet.
We firmly believe that our markets are heading towards those levels in 2011 and as we all can understand that such bigger targets can not be reached in a hurry so there will be some corrective which should be termed as bear market rallies but we will come out with further targets for sensex and nifty.
Since last 4-5 months in our daily and weekly technical reviews we have extensively used candlestick patterns and exponential moving averages to identify all up and down moves of both indices so it will prudent to look at the ema band on weekly charts as now after the massive 3000+ points crash in about three months time now even on weekly charts the 5/8/13 ema band has given a DEAD CROSS below 34 week ema.
And the sensex has for the first time closed below 34 week ema after march 2009 .
In may 2010 sensex closed below this 34 week ema for one week only and bounced back so three consecutive close below it now confirmas our bearish view for medium term as the ema band sell cross is getting converted from daily charts to weekly charts
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