WEEKLY TECHNI VIEW

General technical review for the week ended 18/02/2011 :

i said this when we presented our weekly technical review on 14/02/2011 “

 Although there is no significant candle pattern on weekly chart as on last week which can suddenly reverse the ongoing crash we feel that SENSEX has hit a short term bottom just as a halt to the huge crash that we have seen recently. SENSEX need to close above 18038 to extend the corrective rally further up to 18600+ in a few weeks time.”

And indeed when sensex crossed and closed above 18038 it touched 18691 on Friday and since we also clearly suggested that this 18600+ area for sensex and 5580 around level for nifty has plenty of resistances including  34 day ema so sensex and nifty both met with initial targets and touched 34 day ema and retraced back significantly.

So in a span of just two weeks our targets on the downside were achieved our supports worked and even our targets reached on the up side and resistance levels has also worked remarkably well.

WHAT  NEXT  ?

SENSEX:  sensex found a multiple resistance zone in 34/200 day ema  and Fibonacci retracement level and also the momentum indicator stochastic has turned down from overbought zone so sensex went down by 295 points on Friday and on daily chart there is a candle reversal pattern called DARK CLOUD COVER so preferably the five day rally has ended at Fridays high of 18691.

But looking at the price structure which is a very good “ V “ shape reversal we can expect a RIGHT SHOULDER of the inverted head&shoulder pattern developing if the down side started from Friday looses its momentum and stops above the gapped area and between 17927 and 18050 in the coming week and bounces back.

So watch these support levels in a few days and any upside candle reversal pattern if develops.

Here is the weekly chart of sensex with our comments on it.

Nifty:

For nifty this week 5408-5369 is the most important zone to watch if the supposed inverted HEAD AND SHOULDER pattern has to work.

So in few days if nifty comes down around 5350 and closes back above 5369-5408 completing a solid upside candle reversal pattern there will be higher probabilities of such pattern to work but theoretically the pattern can meet upside targets if and after nifty closes above the neckline drawn on nifty chart which is around 5625.

Also watch fast stochastic movement in first few days of the week as it has turned down and will enter oversold zone by Thursday if the downtrend continues.

If the downtrend started on Friday continues and the pattern does not complete then such failure can have very severe price damage.