WATCH 61.8% RETRACEMENT LEVELS

SENSEX : SENSEX responded to the HAMMER candle pattern very well and has given a smart follow up as it has closed above 16368.

Watch 16663 as this is 61.8% retracement level of the last leg of fall and even if the up side is to continue SENSEX may pause its up side here.

The opening GAP between 16209 and 16282 now becomes a crucial support and although there is a possible double bottom around 15800 a close below this GAPPED area will end any bullish hopes.

Also we will need a few other evidences like an ADX rising up above 30 for the up side momentum to pick up as on date ADX is below 24.

NIFTY : for NIFTY too there is a nice follow up after the HAMMER candle pattern as it has given a good close above 4931 which was earlier RESISTANCE level.

Yesterdays gap between 4878-4905 will be an important support and for the up side to continue through October 2011 NIFTY must not close below 4878.

For the up side 5013 is the 61.8% retracement level which will act as a resistance.

We will have to watch if NIFTY closes above 5013 and traders need to be very cautious as tomorrow will be the last day of current settlement.

FIBONACCI MAGIC WORKS

SENSEX:  we termed the up move from august lows as corrective and we clearly said through this month that the august lows will atleast be tested once.

That is what happened as SENSEX while finding support at 1.618 % retracement level took support at august lows and bounced back sharply.

A HAMMER candle pattern needs follow up move and a close above 16393 can be considered as a good follow up.

Price pattern may look like as a DOUBLE BOTTOM if the up move continues further.

NIFTY : here is an interesting observation regarding quarter end move in SENSEX /NIFTY since last four quarters.

SENSEX rose from 19074 to 20552 NIFTY from 5721 to 6147 in last 12 days of December quarter SENSEX rose from 17792 to 19575 NIFTY rose from 5348 to 5872 in last 9 days of march quarter SENSEX rose from 17314 to 18873 NIFTY rose from 5196 to 5657 in last 8 trading days of june quarter WILL history repeat now ?

We have just 4 trading days but looking at the HAMMER candle pattern on NIFTY chart yesterday we may have four good days of up move to end the September quarter.

NIFTY successfully tested the august bottom and found exact support at 1.618% retracement level of 4760 as it made a low of 4756 and bounced back sharply.

A close above 4930 is a must to confirm some up move to follow.

Short term positional traders should avoid shorts as NIFTY can have an initial target of 5019 on a close above 4930 and if NIFTY sustains above 4876 one can go long.

WEEKLY TECHNICAL VIEW

In our last WEEKLY CHART BOOK we observed from weekly charts of SENSEX and NIFTY that the up move from lows around 15765 and 4720 respectively DOES NOT look to be very positive .

although from daily charts we suggested yet another attempt to cross 17209 and 5177 on Tuesday and the attempt was made as NIFTY touched 5168 and SENSEX touched 17191 but there was a STAR candle pattern on daily charts on Wednesday which suggested indecisiveness at the RESISTANCE levels.

Do remember that since the rise started in markets from the first week of September 2011 we were very much clear about two things,

1)      Any rise should be labeled as a BEAR MARKET corrective rally.

2)      NIFTY has to give 3 consecutive closes above 5177 to change the direction.

As NIFTY could not cross 5177 for a single day and SENSEX could not even cross 17209 (which was an earlier high) after the STAR pattern we said this in our daily technical view on Thursday ,

“NIFTY : a high of 5168 and than a STAR candle formation suggests clear indecisiveness for NIFTY .

A close below 5068 with a GAP down open can confirm yet another TOP in NIFTY and than a close below 5019 will also break the support trendline”.

Than came a massive 704 and 209 points crash in SENSEX and NIFTY respectively which put an end to the corrective upside of September.

TECHNICAL VIEW FOR THE WEEK AHEAD :

As discussed above the markets seems to have ended the corrective rally and are poised to ATLEAST test the august bottoms at 15765 and 4720 very soon.

Since we have seen a good bounce from these lows there will be another attempt to hold the bottoms but all will depend upon if we get ANOTHER candle reversal pattern from around 15765 and 4720 levels.

If we don’t get a solid bounce from these levels than we have down side targets of around 4538 and 14900 SENSEX levels as has been being discussed from here.

Important to note here is that two important stocks HDFC and HDFC BANKS had broken down with HUGE VOLUMES on Friday and we clearly mentioned 2 weeks back about our concern regarding a bearish development in LARSEN & TOUBRO chart  and Larsen too tanked heavily last week so, three major players of bull market has given EXTREME bearish indications which suggests that barring some corrective rallies we are heading towards ATLEAST 4538 AND 14990 levels for NIFTY and SENSEX respectively.

HDFC DAILY CHART :

HDFC BANK DAILY CHART :

LARSEN AND TOUBRO MONTHLY CHART :

SENSEX  DAILY CHART :

NIFTY DAILY CHART :

As can be seen on this NIFTY chart  now onwards NIFTY has two VERY VERY STRONG HURDLES one at 5109 and second is at 5378 both are GAPPED HIGH which have been un filled as on date.

There is another fibonacci magic in place for NIFTY :

As we had shown twice in last three weeks that 4538 is an important Fibonacci support/target level for NIFTY one can see another fibo magic as observed by us on the following NIFTY chart, 4750  and 4500 has become 1.618 and 2.618 retracement levels for one last leg of the corrective upside.

SENSEX WEEKLY CHART :

NIFTY WEEKLY CHARTS :

CNX BANK INDEX WEEKLY CHART :

YET ANOTHER FIBONACCI MAGIC IS SHOWN ON BANK NIFTY CHART:

CORRECTIVE RALLY ENDS : 4538-4625 COMING SOON

SENSEX : a caution was advised to all yesterday itself that there is a STAR candle pattern and if the pattern gets a follow up GAP DOWN move and a move below 16865 will confirm an end to the ongoing CORRECTIVE rally mainly so because indecisiveness happened at a CRUCIAL resistance level.

After a gap down open SENSEX crashed below 16865 and never recovered resulting in a massive 700+ points crash in a single day.

In our weekly chart book that SENSEX must close above 17209-17300 for a change in intermediate trend SENSEX did make some attempt but failed at 17191 on Wednesday.

Every rally is to be used to create fresh short positions because a seeming INVERTED HEAD & SHOULDER pattern is on the verge of failure which will have drastic effect on SENSEX

NIFTY : for NIFTY we said that if NIFTY goes below 5068 it may end the corrective rally and a close below 4927-4915 will confirm an end to the on going up ward move and it will also break the STEEP TRENDLINE SUPPORT and all happened in a single day.

Even such a strong almost a 500 NIFTY POINTS RALLY was never addressed as a BULL MARKET rally and was clearly termed as a BEAR MARKET rally only.

There will be supports around 4720 in coming days if today NIFTY gets a decisive close below 4890 but it seems that NIFTY COULD BE HEADING TOWARDS 4625-4538 in short term.

CRUCIAL STAGE OF MARKETS

SENSEX : SENSEX made a high of 17191 and got resisted forming a STAR candle pattern which suggests in decisiveness of the trend.

A STAR pattern needs a strong follow up to reverse the trend and in our case if SENSEX 16865 TODAY it should confirm yet another top for SENSEX.

Real trend reversal will come if SENSEX closes below 16709 and if this happens than the TRENDLINE will also get broken.

NIFTY : a high of 5168 and than a STAR candle formation suggests clear indecisiveness for NIFTY .

A close below 5068 with a GAP down open can confirm yet another TOP in NIFTY and than a close below 5019 will also break the support trendline.

5177-5196 remains very crucial levels of RESISTANCE for NIFTY and as has been repeatedly being said NIFTY need to give either 3 consecutive closes or atleast a weekly close above 5177-5196 to make the current rally a meaningful one.

SENSEX & NIFTY CHARTS WITH COMMENTS

WEEKLY TECH VIEW

Many a times a picture can tell a story, on 8^th of September we presented this SENSEX chart with our daily technical view, one can clearly see in the UPDATED chart of SENSEX since than that till 16^th of September SENSEX has followed our projection with precision

For the further upmove to continue SENSEX need to close above 17209 and 17314.

But one thing is clear that there was some very good trading opportunity on both sides for short term trader if this chart was observed with interest.

Here is the SENSEX chart after our projection of two side moves

Looking at this weekly chart one can see that there is not much strength in last two weeks movement after a strong bounce back came in the first week of September 2011.

A strong weekly close above 17314 can have turn intermediate term trend from down to up.

But a daily close below 16766 and a weekly close below 16374 will take SENSEX TO TEST ITS AUGUST LOWS AGAIN.

For NIFTY the corresponding levels are 5030 and 4911.

A weekly close below 4911 will take NIFTY to test 4720 again and to turn the intermediate trend from down to up NIFTY need to produce a weekly close above 5177 but I would prefer three CONSECUTIVE close above 5177.

Even after SENSEX and NIFTY has moved as per our projection there is still no clear indication of where markets are headed for medium term.

On the QUARTERLY chart  the down trend seems to be intact unless there is a remarkable recovery in last 12 days of the current September quarter, and a good recovery will come only if NIFTY and SENSEX close a week above 5177 and 17314 respectively.

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SENSEX : The GAP was filled successfully and SENSEX has given a close above the GAP which was a hurdle and now it looks like a HIGHER BOTTOM on daily chart .

We have yet again maintained our track of being with the TREND .

Instead of 16443 yesterdays low becomes a TREND DECIDER level for the SENSEX and all longs should be exited now if SENSEX closes below 16545.

Looking at the strength we can have a SENSEX target of 17209/17314 and above that 17800 is also possible.

NIFTY : NIFTY opened up with a GAP but after making a high of 5046 it went down sharply but recovered strong  and closed above the GAP.

AS suggested earlier one LEG of fall and than a LEG of rise was expected and that is what has been happening.

For NIFTY we can have a target of 5156-5177 and 5249 if closes above 5177.

The STOCHASTICS has just turned up from oversold zone.

A CLOSE OF NIFTY BELOW 5046 AGAIN WILL BE BEARISH.

CRUCIAL STAGE OF MARKETS

SENSEX : supports worked for SENSEX but for intraday only as the GAPPED area proved to a big HURDLE.

AS suggested earlier the structure remains positive until the low at 16443 is broken on a closing basis and yesterday too the support zone worked at the closing.

The STOCHASTIC is fast approaching the oversold zone so if even today SENSEX remains above 16443 on closing basis there will be a fair chance of an upside move.

 a close above 16766 WILL be good for short term.

NIFTY :  NIFTY too found RESISTANCE at 5046 area where NIFTY FUTURE made a high of 5040 but reversed the up move with a very severe down move up to the low of 4903 and remember that even on Monday NIFTY FUTURE made a low of 4902 so once again NIFTY found support at the same level.

TECHNICAL ANALYSIS completely depends upon markets action in terms of PRICE and PRICE BEHAVIOUR suggests that our markets have started to deviate from the world markets since three weeks and if NIFTY closes above 5046 we can have a sharp rally on the upside for the short term atleast because even after dismal IIP DATA our markets have found support at 4927-4915  levels.

Remember that there will be nothing positive if NIFTY closes below 4890.

WATCH LEVELS

SENSEX : THE correction continued with a gap down opening support lies for SENSEX is at 16340 around which is 61.8% retracement level.

We did give an important trend decider level of 16443 and although SENSEX breached it for intraday it gave a close above 16443 but our support zone given on yesterday was 16443-16375 which worked.

Important and strong trend decider levels are placed on chart now which is the GAPPED ZONE OF 16668-16830 and a close above 16830 on any day in coming few days will give a good short term buying opportunity.

But a close below 16443-16340 will make SENSEX retest the august lows.

NIFTY : the support zone given for NIFTY was 4927-4915 and NIFTY made a low of 4911 and closed a little higher but the GAPPED ZNE of 5046-4985 is now the crucial zone for any upside movement.

The 4890 level is 61.8%  retracement level so a bounce back from around 4900 which closes up above 4927-4942 will the desired closing movement for NIFTY which will suggest an end to this correction.

A close below 4890 will make NIFTY to test the august lows and a close above 5046 will provide a good short term buying opportunity.

WEEKLY TECH VIEW

THE RESISTANCE LEVELS WORKS AND CORRECTION SETS IN , NOW WHAT ?

TECHNICAL REVIEW FOR THE WEEK STARTING FROM 12-09-2011 :

We had shown 5116-5177 and 17100-17300 as a zone of strong resistance in our earlier technical reviews and from last Thursday through our daily technical views we suggested a CORRECTION on the down side from the resistance levels.

On Friday we even said this “If after opening today NIFTY can not cross its OPENING HIGH within first 15 minutes and then if NIFTY closes below  5098 we will have first confirmation of a correction setting in.”

And after opening NIFTY made a high of 5163 and within first fifteen minutes this high was not crossed which gave clear indication of what was coming and NIFTY closed down more then 100 points from the days high.

So, the due correction has set in now the question is where will it stop ?

Looking at the leading world market indices like DAX and FTSE which have broken their august lows it is possible that SENSEX and NIFTY too can d the same BUT since our market has deviated a little in last two weeks of trading from the world markets SENSEX and NIFTY can find some support at 4720 and 15765.

But if SENSEX and NIFTY does not break 16443 and 4927 within first three days of the coming week they may form a HIGHER BOTTOM .

So looking at the two distinct possibilities the only way for us to closely follow markets for next few days.

For a significant bottom in place markets will have to have a BASE FORMATION which can be a PRICE PATTERN or can be a DOUBLE CANDLE REVERSAL PATTERN on weekly charts .

Do remember that we have projected a strong upside rally from around 15300-15500 and 4538-4625 SENSEX AND NIFTY levels respectively if the august lows gets broken.

CORRECTIVE RALLY AT CRUCIAL LEVEL

SENSEX : SENSEX continued its upward journey but now it has reached CRUCIAL RESISTANCE  AREA so one must take care in longs for the SHORT TERM.

A correction will be healthy from here because in all probability there will be a HIGHER BOTTOM FORMATION and also if the CORRECTION remains slow and DOES NOT BREAK 16488-16432 it could well be a RIGHT SHOULDER OF the inverted H&S PATTERN.

This process will take time and the anticipated correction must remain slow.

Resistance 17157 and 17445 and supports at 16894 and 16688.

NIFTY : NIFTY has now reached important resistance levels and after such a STEEP rally a correction should be a welcome one and should give a BETTER buying opportunity in stocks which are making some REVERSAL PATTERNS and showing some strength.

4942 and 4927 are now IMPORTANT TRENDDECIDER LEVELS and if NIFTY is to make a higher bottom it must not break these levels on closing basis.

WEEKLY TECH VIEW

WEEKLY TECHNICAL VIEW FOR THE WEEK STARTING FROM 05-09-2011 :

At the beginning of the last week it self we had projected a CORRECTIVE RALLY for the markets from oversold status of most of the MOMENTUM INDICATORS on weekly basis.

We put forward an observation that if BROKEN LEVELS are recaptured soon we can have a rally and level wise we said this

“Since on last Friday we have already seen a SENSEX low of 15765 we believe that we have achieved one important bearish target and the big question will be NOW WHAT ???

AS on Friday 26^th august SENSEX has given a close below 38.2% retracement level which 15990 so for the next week we have to look if SENSEX can give a close above 15990 as a SHORT TERM positive clue.

For NIFTY this level is 4777-4796 so for NIFTY we have to look for a close above 4796 in coming week for any positive upside.

But the real good upside will be possible ONLY if SENSEX can close above 16213 and if NIFTY can close above 4965 ESPECIALLY on a weekly closing basis. “

In the followed up DAILY TECHNICAL VIEWS  later in the week after NIFTY and SENSEX closed above first level of resistance on Monday we had given targets of up to 38.2% retracement levels for SENSEX the target was 16973 and for NIFTY the target was 5096 both indices got resisted after hitting their targets respectively as these levels were described as important RESISTANCE LEVELS TOO.

This upside rally of three working days looks CORRECTIVE but many sectorial indices including NIFTY and SENSEX have completed a good BULLISH CANDLE REVERSAL PATTERNS ON WEEKLY CHARTS.

We are clear in our opinion that after such massive scale sell off which we have seen in the month of august markets can not make any SIGNIFICANT BOTTOM in a short span of a week.

We will have two options :

SENSEX AND NIFTY will make a higher bottom above their most recent lows of 15765 and 4720 respectively and we will see ANOTHER BULLISH CANDLE REVERSAL pattern on weekly charts

Or

SENSEX and NIFTY will go a shade below their recent lows (remember that we had already suggested very high chances of A SIGNIFICANT rally from around 15300-4538 levels) momentum indicators will have POSITIVE DIVERGANCE ON DAILY CHARTS  and then markets can have one significant up side rally.

In the second option too SENSEX and NIFTY will make another CANDLE REVERSAL PATTERN on weekly charts.

It is clear in both possibilities that we will see ATLEAST one more down side leg in coming days BUT already there is some real buying interest being seen in SELECTIVE stocks like reliance which suggests that we should take care in shorts for some time now.