WEEKLY TECHNICAL VIEW : A FEW CHARTS

UP SIDE TARGETS REACHED

CHART SPEAKS :

WISHING ALL MY READERS A CHEERFUL YEAR

I WISH ALL A CHEERFUL YEAR WHICH MAKES THEIR LIFE A VERY HAPPY AND PEACEFUL ONE.

LIKE OUR BELOVED INDIA EACH OF US HAS THE POWER TO SHINE LIKE A SUPER STAR IN THE DARK WORLD AROUND US.

JAI SAINATH.

WEEKLY TECHNICAL VIEW

WEEKLY TECHNICAL VIEW OF SENSEX AND NIFTY FOR THE WEEK STARTING FROM 25-10-2011:

Shortened week due to DIWALI holidays and INDECISIVE technical picture in addition to bigger events like EU MEET on greek crisis and RBI meet on Tuesday makes it very difficult to predict the future of our markets for the next week.

Level wise for NIFTY 5011 has become an important trend decider level same level for the SENSEX is 16669.

For more hopeful long side traders 4964 and 16510 are two crucial STOP & REVERSE levels for NIFTY and SENSEX.

IF the on going side ways move between 5160-4964 proves to be a corrective only and NIFTY breaks the barriers at 5177-5196 it will reach 5225 and 5330 for SENSEX an important target is 17800 if it breaks 17200.

First indication of such an upward break will come if on Monday crosses 5106 and stays above it for 10-15 minutes.

The more difficult time for bulls will come whenever NIFTY and SENSEX closes below 4964 and 16510 because after that they will have down side targets of 5625-5538 and 15300-14900 respectively.

There are some good technical evidences like positive divergence in MACD and EMA crossovers but since ADX is still not picking up momentum markets are not moving big in either direction.

If we talk about  a little longer picture a very few stocks are showing some signs of bottoming out still a very large number of stocks which were very active in the last bull run are not showing any symptoms of significant bottoms.

So even if indices are managed to break certain key resistance levels it should not be considered as KEY REVERSAL IN CURRENT TREND.

Although with our sharp and innovative technical tools if find some strength somewhere we will let our readers ride good up moves.

the most crucial resistance zone  17211-1731 and despite a good bull candle in the second last week SENSEX just can not cross these hurdles. bullish supportive buying got generated from around 16515 and from 16669

BUT

if such bullish attempts can not convert in to a crossover of these hurdles eventually bears will again take control.

CORRECTION DUE

SENSEX : A correction was anticipated from around 17200-17300 and SENSEX made a high of 17191 in a GAP UP open and corrected by closing 57 points down.

Watch the SPEED of a due correction is the key word now.

16510 is the good support level and we will have to wait for the STOCHASTICS to enter oversold zone again .

NIFTY : NIFTY made a high of 5160 in between our target of 5156 and most crucial RESISTANCE of 5177 as NIFTY found support at 5084 we have to watch 5084 today as below 5084 NIFTY has supports well down at 5034.

This phase of markets may be a distribution phase only with a broad 500 points of range. it could be a " DOUBLE BOTTOM " or it could be even a " RECTANGLE ".we will have to wait for some more time to see the actual pattern unfolding.

All depends upon the speed of correction which may have started in line with our expectation and if the correction ends above 4964 it will be a good buying opportunity for the short term.

WEEKLY TECHNICAL VIEW 171011

TECHNICAL VIEW FOR THE WEEK AHEAD BASED ON WEEKLY CHARTS  DATED 14-10-2011 :

We are on track yet again but this time it was a bull rally for the whole week which we did not miss.

We have been very categorical in our view that there can be a very sharp bear market rally and we were waiting for certain clear evidences and these were,

TECHNICAL :

1.       chance of a price pattern

2.       Positive divergence in momentum indicators

3.       Reversal candle pattern

Psychological :

1         News flow plays an important role in identifying TIMING of any price reversal

2         Judgement of traders /media sentiment plays a key role I technicals.

We found a small FALLING WEDGE on indices chart which can be a reversal pattern and there was a potential of a DOUBLE BOTTOM around 4720 in NIFTY we also presented a NIFTY chart which clearly showed a POSITIVE DIVERGANCE with its MACD and last there was a potential candle reversal pattern called DRAGONFLY DOJI  and one important index BANK NIFTY did reach our down side target which was a strong support too.

On psychological front when NIFTY closed at 4756 traders would have firmly believed that it will breach 4720 as there was very bad news flow like rating of SBI was cut and there was fear of Greece and Italy default and media was strongly BEARISH.

All these was enough for us to call it a SIGNIFICANT BOTTOM and for our readers we said clearly that a close above 4924 will confirm a strong bottom in place and we did give targets of 5156-5225-5340 for nifty early in the last week.

Just to take a pleasant note here is what we said in our WEEKLY CHART BOOK on 5^th September 2011:

“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.”

SENSEX went down a shade below 15765 and NIFTY remained up a little there was a chance of DOUBLE CANDLE REVERSAL PATTERN as we found a DRAGON FLY DOJI and there was a clear POSITIVE DIVERGANCE on daily chart so what we said a month ago came as true on charts.

NOW WHAT ?

As we said earlier we have now a strong close above 5034 and 16756 for NIFTY and SENSEX respectively so ideally every dip is a buying opportunity strong support for NIFTY is at 4991-4967 levels and 5045 is also an important support so slow down side correction would be to enter long with  SAR at 4967 and on the upside NIFTY will face some resistance around 5177-5196 which is 17200-17415 for SENSEX .

There are very bright chances that after a brief correction NIFTY and SENSEX will reach 5225-5340 and 17800 levels in a couple of weeks time.

Do remember that these kind of rallies can be BEAR MARKET rallies only so we will have to be very selective in stock picking and at any hint of weakness on daily charts one should be prepared to exit longs so for longs 4965 is a good SAR level as on today.

5177-5196 has been the key REVERSAL zone established on daily & weekly charts of NIFTY so there will be some efforts from bears around 5200 and so there will be a down side correction and even if NIFTY breaches 5177-5196 and SENSEX closes above 17200-17315 for a day care should be taken for longs for the short term.

A HEALTHY correction which should remain slow up to around 5045 and 4991 can be used to enter long .

Three consecutive close above 5177-5196 zone can trigger some real short covering  even before any correction takes place which than can take NIFTY up to our upper targets.

BANKING STOCKS :

In our WEEKLY CHART BOOK last week we clearly said that BANKING STOCKS looks to have hit a significant bottom and during the last week many active bank stocks generated an up move of 5-8% points.

A few other banks looks to be poised for further upside in coming days

a   " v " shape recovery and fibbonacci magic in which 1.618%  retracement of one leg matches 38.2% retracement of a big down leg.a  break above 11320 can take cap good index  to 11852 and 12315

VIEW ON CHARTS

AN IMPORTANT HURDLE CROSSED AS WELL

SENSEX : SENSEX rose sharply up after initial unbelievable volatility and has crossed another important hurdle at 16756.

We still have two days left in this week but now there should be BUY ON DIPS till SENSEX remains above 16756 on closing basis.

We believe that even poor results have been discounted in the current price so a LITTLE BIT better results will cheer traders/investors.

NIFTY :

any dip up to 4997 and 4965 should be a good buying opportunity.one caution is that such a dip should not be so fast as to close below 4965 in a single day.

targets : 5156-5177 and than it should make a higher bottom if that happens or on a strong close above 5177 NIFTY will have a target of  5225-5340.

4851 has now become a very strong support and trend decider level.

If one carefully reads our weekly chart book on 5^th September we said that markets will have a significant upside after they show POSITIVE DIVERGANCE on daily chart and upside will come after TWO CANDLE REWERSAL PATTERNS on weekly chart.

Both things are in place on daily & weekly charts.

Two days still left for the week to end so NIFTY MUST close above 5034 for further upside targets.

A STRONG CLOSE ABOVE 4924

NIFTY : NIFTY again opened up with some gap and after first hours sideways move it quickly crossed 4924 which was a level we have been mentioning since last week and above 4924 there was no look back as slowly many active stocks started to participate.

A strong close above the BEARISH GAP AT 4924 NIFTY has shown strength as suggested in our weekly technical view we will have to watch 5034 now as an important target and a strong close above 5034 especially by Friday can take NIFTY back to 5156 atleast.

NIFTY must sustain above Friday open level of 4884 and above 4924 on closing basis to sustain bullish ness.

WEEKLY TECHNICAL VIEW

AN INTERSTING CANDLE PATTERN ON WEEKLY CHART OF SENSEX   : DRAGONFLY DOJI :

Let us first read what a DRAGON FLY DOJI is all about

bullish dragonfly doji candlestick

Bullish Dragonfly Doji

  • Direction: Bullish
  • Type: Reversal
  • Reliability: Moderate


 

  • Pattern is strongest after an established bearish trend
  • A candle forms with a very small to almost nonexistent body with a long lower wick
  • The lower wick is at least twice as long as the candlestick body
  • Little or no upper wick


In a bearish trending market the dragonfly illustrates an unsustainable sell-off, where price drives up to new lows, but buyers take control of the trend by market close. 

Although this formation is a moderate to weak signal, it is a warning for longs that the downtrend is losing momentum and bull may retake the market soon. 

Most candlestick analysts will wait to confirm the signal, watching for a blue candle on day two.

HERE is the weekly chart of SENSEX as on 07-10-2011 :

The Dragonfly Doji is created when the open, high, and close are the same or about the same price (Where the open, high, and close are exactly the same price is quite rare). The most important part of the Dragonfly Doji is the long lower shadow.

The long lower shadow implies that the market tested to find where demand was located and found it. Bears were able to press prices downward, but an area of support was found at the low of the day and buying pressure was able to push prices back up to the opening price. Thus, the bearish advance downward was entirely rejected by the bulls.

TECHNICAL VIEW FOR SENSEX AND NIFTY FOR THE WEEK AHEAD :

As one can see the SENSEX chart above as on Friday SENSEX completed a “ potential” reversal candle but before calling 15745 as a rock solid bottom we must wait for the follow up bull candle next week.

We are not trying to catch a BOTTOM but as we have identified certain TECHNICAL evidences we believe that if certain levels are crossed we can have a significant up side from these levels also NOTE that an IDEAL up move will come after SENSEX and NIFTY completes atleast one higher top and higher bottom formation on daily charts so look for this to happen in coming days.

Although as on daily chart if by Monday or Tuesday NIFTY closes above 4924 and if SENSEX closes above 16404 we will have a good confirmation to enter long.

A weekly close above 5034 and above 16756 for NIFTY and SENSEX respectively will give a more solid confirmation that we have a good bottom in place.

We will track different indicators during the next week to identify strength if a bottom is actually in place but this BANK NIFTY chart suggests that atleast BANKING STOCKS may have hit one significant bottom.

CNX BANK INDEX  WEEKLY CHART :

We projected the target of 8500 around during last week CNX BANK INDEX made a low of 8625 and bounced back.

TECHNICALLY we need to see and confirm that a HIGHER BOTTOM & HIGHER TOP is in place for SENSEX and NIFTY to call it a bottom but we did suggested a few weeks back that there can be a significant bottom in our markets around NIFTY level of 4538-4625 and SENSEX level of 14900-15300 but BANK NIFTY completed its projected target and in the mean time NIFTY and SENSEX just did not breach their august lows.

We also clearly mentioned that there will be some sort of price pattern I place and now NIFTY AND SENSEX can have a “ DOUBLE BOTTOM “ also if NEXT WEEK remains bullish SENSEX AND NIFTY may form a “ DOUBLE CANDLE REVERSAL “ patterns on weekly charts which was also discussed.

Also “POSITIVE DIVERGANCE “ was one TECHNICAL concept which we discussed earlier and here are few examples of A STRONG positive divergence inplace.

NEXT WEEK remains an important week to watch for confirmation of a significant bottom in place for our markets.

4720 and 15765 remains the TREND DECIDER levels for NIFTY and SENSEX as far as further down side possibilities are concerned and we will confirm any weakness at higher levels when ever it happens.

Perfectly NEGATIVE media and trader sentiment is what needed at any bottom and it is in place at this time

TECHNICAL VIEW FOR 05102011

SENSEX :It was yet another GAPPED DOWN day SENSEX tried to fill up the gap but got resisted at the  GAP and than tanked heavily reaching to the august lows again.

16200 was our resistance level for the day and SENSEX could not breach that.

15745 was the SENSEX low which was a shade below 15765 and SENSEX has closed above both these lows but the GAP between 16290 and 16404 is very crucial hurdle and as SENSEX has not closed below 15765 if SENSEX closes this week above 16404 there can be another up side possible.

For today 16056 is a resistance to watch.

NIFTY : NIFTY went down to the august low of 4720 as per expectation as it made a low of 4725 .

NIFTY made a high of around 4880 which was the earlier GAPPED DOWN level and was described as strong resistance and since last week we were consistant in saying that if NIFTY closes below 4879 it will touch august lows.

A good intraday bounce back from 4725 can take NIFTY back to around 4830 where it will again face selling pressure and a close above 4839 can take NIFTY to around 4880 again.

But if as on Friday NIFTY closes above 4924 than it can have further upside.

WEEKLY TECHNICAL VIEW

TECHNICAL VIEW FOR THE WEEK AHEAD :

SENSEX and NIFTY seems to have entered a phase from where there can be another leg of severe down move may start soon.

Before we discuss technicals on the basis of different time frames it is usual to have a look at what we suggested in our last WEEKLY CHART BOOK dated 26^th September 2011.

“ TECHNICAL VIEW FOR SENSEX & NIFTY FOR THE WEEK STARTING FROM 26-09-2011

As discussed above the markets seems to have ended the corrective rally and are poised to at least 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 NIFTY 4538 and SENSEX 14900 levels as has been being discussed from here.”

On Monday itself SENSEX made a low of 15801 against its august 2011 low of 15765 while NIFTY made a low of 4759 against its resent low of 4720 so as presumed both indices TESTED their august lows and bounced back sharply off lows in first two days.

As expected there was another attempt to hold the bottoms and looking at the week end and especially Fridays movement it clearly seems that the upmove from Monday looks weak.

If the BULLISH GAP between 16209-16282 for SENSEX and between 4878-4905 for NIFTY gets filled up and if both indices closes below these GAP then the recent lows around 15765 and 4720 will be in danger soon.

If this happens watch how our projected supports/target at around 14900-15300 and 4538-4625 works.

For any upside potential for the coming week the 5013-5079 zone for NIFTY and 16756-17000 zone for SENSEX are to be crossed as per us even the opening levels of Friday 4990 and 16599 will also be very difficult hurdles for NIFTY & SENSEX respectively.

As being repeatedly suggested from here SENSEX and NIFTY has to produce three consecutive close above 17300 & 5177 respectively for a change in intermediate trend.

Larsen & toubro played an important role in WEAK rise of indices through the last week, here are two charts of L&T with our comments