WEEKLY TECHNI VIEW

Technical review of the week ended 18-03-2011:

Last week was also the week in which markets  traded in a small range.

This range bound markets was very categorically anticipated in our daily and weekly technical views since a few weeks now.

For nifty our support of 5376 worked on Tuesday as nifty made  a low of 5373 and then for next two days our resistance of 55531 worked as well .

Nifty made a high of 5535 on Wednesday but closed at 5510 and our critical level of 5442 worked for two days as nifty somehow closed just above it at 5446 on Thursday but then as we suggested on one chart in our daily technical view that every rise can be shorted till 5531 is taken out on the closing basis markets crashed on Friday again closed at a precise support level of 5373.

For sensex terms we said clearly on 15^th march that short every rise till sensex closes above 18440 sensex made a high of 18444 and 18354 on 16^th and 17^th but was not able to close above 18440 and the resultant effect was that sensex closed at 17849 loosing almost 700 points from our STRONG resistance level.

This was sensex chart we presented on 15^th march.

We would like to take up a detailed study of BSE METAL index using three different indicators and plotting them on daily and weekly charts.

From this BSE METAL daily chart one can see that the ADX which measures momentum of a move in either direction has reached above 21 which suggests STRONG momentum on the downside once adx reaches above 25 and stays there for 2-3 days metals will really start melting very fast so watch it for next few days the  ROC and the STOCHASTIC MOMENTUM indicators are both below zero and both have broken supports so from this daily charts it looks that once BSE METAL index closes below earlier supports at 14832 there will be very speedy crash coming in metal stocks.

As we go one period higher and study these indicators on weekly chart of BSE METAL one can see that even on weekly chart the ADX has turned up and reached 17 if BSE METAL index can not give a strong upside close on weekly basis in next 1-2 weeks ADX will pick up more downside momentum even the ROC and STOCHASTICS MOMENTUM have been below zero levels and are in clear SELL mode.

The only hope for this index on weekly chart is the BASE trend line of the TRIANGLE and the 89 week ema so on the weekly basis once these two supports are broken we are to see STRONG selling pressure in BSE METAL index.

BSE REALITY BSE PSU AND BSE CGS  are the most hit sectors in market correction since November 2010 and we can see at a glance to the bse cg index that our advice to be in cash way back in noveber 2010 was very timely as the saying goes MONEY SAVED IS MONEY EARNED.

SENSEX view for the coming week starting from 21-03-2011:

There is no change in the MAJOR directional prediction of MINIMUM 15000 for sensex for the year 2011 but the recent sideways phase may have confused many traders as it lasted for six weeks but from the beginning of last week we provided enough technical evidences that this phase should prove corrective DISTRIBUTION only and last Fridays big sell off provided a good trigger to the bears to crack the feb lows.

Still the 89 week ema and the trendline has to get broken to confirm the start of fresh panicky down move.

We also suggested about the probable topping pattern in DJIA and other major Europe indexes.

For this week sensex has now very STRONG resistances at 18104 and 18353 and has some supports at 17718 and 17470 and a weekly close below any of these two levels should most probably start a bigger crash.

Nifty:

For nifty 5531 was our suggested resistance level through last week and it proved to be strong enough.on daily chart we had drawn a second resistance line below the neckline which was earlier shown as resistance line.

Also nifty has strongly closed below the 8-13-21 ema band on daily chart with a big BEAR candle on Friday last.nifty is also trading inside the keltner band and on Friday it has closed way below 20 day ema inside the band.

All in all a DISTRIBUTION phase will confirm another stronger downtrend on a close below 5338 for this week nifty has resistance at 5442 and 5531 and support at 5338 and 5253.