FALLING WEDGE

WEEKLY CHART BOOK

WEAKNESS ON WEEKLY CHART:

Both SENSEX and NIFTY has been very violent since last two weeks

First was the WEEK OF EVENTS  where in there was extreme volatility on BUDGET DAY and in the next as once it seemed that both indices are getting ready to have a smart rally a NEGATIVE and UN EXPECTED flow negated one days STRONG positive move.

It has been difficult for traders and difficult to analyse as well.

For the coming week we will rely completely on LEVELS on CLOSING BASIS.

For SENSEX the HIGH at 17687 is the most important hurdle as of now also for any upmove SENSEX will have close above the FALLING TRENDLINE drawn on SENSEX chart here.

For NIFTY 5385 IS now the most important RESISTANCE level besides the FALLING TRENDLINE

NIFTY will have to give a STRONG CLOSE above this TRENDLINE for any possible turnaround in the next week.

On the down side a NIFTY CLOSE below 5177 will open down side TARGETS of 5079 and 4947.

On the WEEKLY CHART both SENSEX and NIFTY are perhaps moving in a FALLING CHANNEL and are forming an A-B-C form of a ZIGZAG corrective pattern

This means that SENSEX and NIFTY should have a SIGNIFICANT upside from either 50% or 61.8% retracement levels.

For NIFTY these levels are 5070 and 4947 so we will watch for support coming up from just below 5100 in coming days if NIFTY breaches 5171.

TECH VIEW 210312

SENSEX: there  is no change in our view as SENSEX did nothing as such at CLOSE.

The GAP is filled in but SENSEX  has closed ABOVE the GAP once more

For two days we now have two more levels to watch ABOVE which this DOWNTREND can reverse it self these are 17410 and 17562 so if today SENSEX can move strong above 17410 for an hour and than can close above 17562 we can see a new uptrend.

SENSEX has been taking support at 200 D EMA and at BULLISH GAP so once it closes below the GAP it will move towards 50% and 61.8% retracement levels.

NIFTY : NIFTY also has support at 200 D EMA and at the BULLISH GAP at 5242

The BEAR EFFORTS to breach the GAP has not worked since last two days almost around 5200 NIFTY is also getting support from its 200 DAY EMA so for the downtrend NIFTY MUST close below 5238

On the upside if NIFTY stays above 5300 for an hour we can a short term TREND REVERSAL but NIFTY will have to close above 5340 for that.

WEEKLY CHART BOOK 19TH MARCH 2012

TECHNICAL VIEW FOR SENSEX & NIFTY FOR THE WEEK STARTING FROM 19-03-2012

In one sentence I am BEARISH for the short & even medium term while BULLISH for long term but no buying entry until at least we get a good & solid BOUNCE which can last for medium term so a clear advice to exit longs.

The BEARISH VIEW will change if NIFTY CLOSES A WEEK ABOVE 5499 and this level is AS OF NOW it will get changed in future as markets gives us new levels to watch for long side entry.

More TECHNICAL DETAILS is here :

After a MASSIVE rally started from end of 2011, our markets are at a crucial juncture not only for the SHORT TERM but may be for the rest of 2012.

We still insist that we are very much clear in our mind about the long term INDIA GROWTH STORY being intact but we want to stress here that there are still hiccups and road blocks ahead of us before SENSEX initiates a move which will take it towards 43000+ levels.

Looking at the short and medium term possibilities, AN INVESTOR will have a better buying opportunity later this year BUT NOT NOW.

All the short term negatives on the chart will DISAPPEAR if SENSEX can close a WEEK above 18003 and IF NIFTY can close a week above 5463.

If this positive turnaround does not happen that we are in for a troubled time.

To understand the possible technical picture let us understand different moves of NIFTY for the past few months. NIFTY bounced back strongly from 4538 to 5640 from December 2011 now 5640 was the 61.8% retracement of the whole 2011 crash we hoped for a MAJOR TREND REVERSAL looking at the strength of that rally.

But price movement from there on in the last month suggests that there is now a strong possibility that the last rally has already ended and markets are going to see another stronger bearish trend.

Let us read what we said here on 27^th February

“WHAT NEXT ?

If on Monday both indices can trade above THESE GAP levels of 5460 and 18000 and then if they trade above 5537 and 18250 for an hour or so we may see an upside reversal.

The downside correction which has just started may unfold in an A-B-C ZIGZAG corrective before making an attempt to reach our SECOND MEDIUM TERM TARGETS 5947/19803 for 2012.

If the correction goes much deeper STRAIGHT AWAY we may see a little longer lasting CORRECTIVE in the form of a TRIANGLE with its first leg as the largest one and in that case the correction will last for a much longer TIME.

On the weekly basis 17300 is a very good support as this level was a strong resistance in bear trend now it becomes a support one more support is a low at 16828 and in a few weeks’ time if the recent correction continues, we advise to go long in this zone of 17300-16828 as from this zone there will be a strong bounce back.

For NIFTY this zone is 5195-5076.”

This was written when NIFTY was at 5402 it gave a real short term buying opportunity at 5171 and when NIFTY was at 5232 we had given a TARGET of 5455 as well also as NIFTY reached our TARGET but as SENSEX could not close above 18003 we had given a clear caution note that a LOWER TOP may be in the offing if NIFTY closes below 5438

That close came very next day and NIFTY closed below another crucial level of 5342 almost confirming a lower top.

We also said this on 27^th February

“TRY AND UNDERSTAND SOME BASIC TECHNICALS TO BE ABLE TO FOLLOW A TECHNICAL ANALYST

A ZIG ZAG PATTERN

I suggested here that SENSEX and NIFTY will unfold a correction (which seems have started) in a ZIG ZAG PATTERN here is a bookish description of a zigzag correction

Zigzag

The zigzag pattern shown in figure 7.21 is the most common correction structure

A zigzag can consist of one zigzag, a double zigzag, or, rarely, a triple zigzag. The zigzag belongs to the family of sharp corrections.

Rules and Guidelines

• A zigzag correction has three waves.
• Wave A is an impulse wave or a starting wedge impulse wave.
• Wave B can be any kind of correction pattern.
• Wave B is smaller than wave A.
• Wave C is an impulse wave or an ending wedge impulse wave.
• Wave C is not an ending wedge impulse wave if wave A is a starting wedge impulse wave.

 As EXPLAINED earlier on the above NIFTY CHART of 24^th February, the CORRECTION went underway in an exact manner.

We said” NIFTY WILL RESUME ANOTHER LEG OF UPMOVE FROM 5197-5240 “that leg has also came and finished at 5480.

Let us see how NIFTY has behaved and how we can predict possible move to come

5630

                              5499

                                        

                                    5317

               5171

We had seen a strong up move from 4538 to 5630 and looking at the selling pressure in end February; we said that a larger correction is on.

If we are in for a LARGER CORRECTION then the up move from 5171 to 5499 was ONLY a correction of the possible first leg of down move from 5640 to 5171.

In this case 5499 is a LOWER TOP now and we will see a minor bounce from 5171 around and then NIFTY will breach 5171.

When a lower top confirms one can’t HOPE for supports to work but should wait for ENOUGH TECHNICAL evidence that support has worked to enter longs.

Supports/targets are 5076 and 4977.

The projected move up to 5076 can be a SIMPLE ZIGZAG corrective or can be a part of COMPLEX corrective like a TRIANGLE, time will let us know about the future shape of correction to unfold.

But it is not a time to buy unless NIFTY closes a WEEK above 5463-5499 or if it finds a STRONG bottom at lower levels with a CANDLE REVERSAL PATTERN ON WEEKLY CHARTS.

SENSEX AND A PRICE ZONE :

At times when indicators seem to fail or when a channeled move seems not working charts can have some clues in a price zone.

Here is such an observation as shown on this weely chart of SENSEX .

One can see that the price zone of 17295 to 18000 has been seeing a lot of price action in terms of HIGHS and LOWS in the last two years.

After remaining below this zone for almost six months from July 2011, SENSEX briefly closes above this zone but very soon SENSEX is in the zone again.

Looking at the weakness on Daily Chart if SENSEX closes back below this zone on a weekly basis, SENSEX will again enter in an intermediate downtrend.

This zone of 17295 to 18000 is a STRONG TREND DECIDER ZONE may be for the rest of 2012.

One can see a lot of highs and lows in this zone of 5177 to 5399 for NIFTY and if NIFTY closes a week below 5177 the trend will become strongly bearish.

BULLISH hopes only if NIFTY can manage a weekly close above (close on any FRIDAY) 5463-5499.

TECH VIEW 14TH MARCH 2012

SENSEX:SENSEX is near a RESISTANCE level but the uptrend has strength as per WEEKLY CHART still SENSEX must close above 18003 and especially a weekly close above 18003 will surely favour bulls so watch this level.

On the downside a low of 17494 is new crucial TREND DECIDER level for SENSEX for this up move.

We had predicted the down move correction to come in a ZIGZAG wave and it has unfolded exactly in that way also SENSEX has bounced strong from our supports only.

NIFTY : PRICE MOVING BACK ABOVE 8 AND 13 DAY EMA BAND,BUT,WATCH 5460 BECAUSE FOR UPTREND TO CONTINUE NIFTY MUST CLOSE ABOVE 5460

We had clearly projected a TARGET of 5208-5196 when NIFTY was around 5360 and we also said that from the zone of 5196-5208 there will be a STRONG bounce back our target of 5455 will be reached today

And a close above 5460 is crucial.

If NIFTY moves STRONG above 5460 it will touch 5531 and 5640 again

WEEKLY TECHNICAL VIEW 12TH MARCH 2012

“MARKET IS SUPREME AND IT CAN GO IN WHATEVER DIRECTION IT WANTS TO GO “ this is an universal truth

Another TRUTH is that in general market is unpredictable BUT to identify a DIRECTION we have to FOLLOW IT

These are hard earned lessons in my journey of learning technical since 1996 and I am trying to put my better efforts in SIMPLY FOLLOWING MARKETS without any arguments during the course I am trying to identify PROBABLE supports and RESISTANCE LEVELS hoping that market will honour them

Success is seen because we use MULTIPLE TOOLS at a time to identify turning points.

Like during last week we used 38.2% FIBONACCI LEVEL and 13WEEK EMA VALUE as support for SENSEX and NIFTY and we used a STOCHASTIC ENTERING OVERSOLD ZONE as a possible reason for SENSEX and NIFTY to bounce back

Another TECHNICAL TOOL used to have a support was AN EARLIER HIGH for SENSEX we suggested 17003 as a good support and it made a low of 17008 and bounced back

Have a look at this SENSEX WEEKLY CHART

For NEXT FEW WEEKS 17003 is a now a NEW PIVOT SUPPORT for SENSEX and 5171 will be a new PIVOT SUPPORT LEVEL for NIFTY

But we have a better support TRENDLINE in place on WEEKLY CHART OF NIFTY

To protect our long position this TRENDLINE should be used as a STOP in the future and a WEEKLY CLOSE below this TRENDLINE can cause some panic in markets in the future.

We had already given upside TARGETS OF up to 5455 for NIFTY and for SENSEX this target is 17943 and upmove will be considered as corrective TILL THESE LEVELS but IF SENSEX CLOSES ANY WEEK ABOVE 18003 AND IF NIFTY CLOSES A WEEK ABOVE 5459 both index can again reach upto 5649 and 18523 again

The TECHNICAL REASON for this higher side projection is the STOCHASTIC ON WEEKLY CHART

NEXT WEEK will be very eventful week so one must watch what NIFTY DOES AROUND 5455 AND WHAT SENSEX DOES AROUND 17943 a STRONG MOVE beyond these levels can trigger further upside but a SHARP DOWN SIDE REACTION from these TARGET/RESISTANCE LEVELS can hurt the positive TECHNICAL PICTURE AS WELL.

BANK NIFTY :

AFTER a BREAKDOWN off the INTRADAY TRIANGLE BANK NIFTY went to the support of 10100 and got a strong bounce back

For the NEXT WEEK if BANK NIFTY can move strong above 10732-10852 it can reach new recent high especially a CLOSE above 10852 will be EXTREMELY POSITIVE for BANKING STOCKS ONCE AGAIN.

PROTECTIVE STOP FOR THE NEXT FEW WEEKS WILL BE THE TRENDLINE DRAWN ON BANK NIFTY CHART.

NEW UPSIDE TARGETS IN THE ZONE OF 12030-12136 WILL BE POSSIBLE IF BANK NIFTY can close a WEEK above 10852 and then if crosses 11226

WEEKLY TECHNICAL VIEW

TECHNICAL VIEW FOR SENSEX & NIFTY FOR THE WEEK STARTING FROM 05-03-2012

For NIFTY the second GAP between 5460-5428 was suggested as a TREND DECIDER GAP in our earlier DAILY & WEEKLY TECHNICAL VIEWS and as NIFTY did give a CLOSE below this GAP in earlier Week these levels was suggested as STRONG HURDLES and NIFTY could not cross 5460 during the last Week as it made a high of 5458.

For SENSEX these GAP levels were 17890-18000 and 18000 was an exact high during the last Week so during the last Week this GAP analysis was proven right and for the NEXT WEEK as well NIFTY will have to move strong above 5460 and SENSEX will have to cross 18000 for any sign of the DOWNSIDE CORRECTION TO HAVE ENDED.

One more support is at 34 DAY EMA for both SENSEX and NIFTY so for the NEXT Week if SENSEX breaches 17463 and if NIFTY closes below 5297 both index will move quickly towards their 38.2% retracement levels of the BIG RALLY .

These levels are 17226 and 5208 for SENSEX and NIFTY respectively.

We believe that the BIG RALLY which started from 4538 /15150 is BEING CORRECTED and as explained last Week this CORRECTION may unfold as either AN A-B-C ZIGZAG or as a TRIANGLE.

This correction may take a few Weeks or if NIFTY closes any day above 5531 or if SENSEX closes above 17931 the last BIG UPMOVE may continue BUT as of now we need to let the market tell us what it wants to do and for that we have to track levels only.

A VERY INTERESTING PRICE PATTERN WILL DECIDE SHORT TERM TREND FOR OUR MARKETS

Let us discuss a few important characters of “MARKET”

Lot of market commentary and analysis is based on this premise that market reacts to events…and people get excited at the prospect of bullish news. You would have heard it like if Crude tanks to USD 90 – Indian market will zoom to new highs. Well Crude is at $128 now and I see traders talking about 6500 on NIFTY

The fact is market is not a reactive engine but it is a discounting engine. Haven’t you heard: Buy the rumour and Sell the news phrase? Market does not react to events…it anticipates/predicts events and discount them well before they happen…that’s what the job of the market is.

It’s not that market does not react….

Well there are many times when market has to price in big surprises all of a sudden.

Market makes a violent move in the direction of disbelief. And there are times, when market is not able to predict event and if that comes as a surprise to the market – then it does react violently. But such events are not in the discussion domain and that’s why they come as a surprise.

NOW market is trying to tell us something by developing a PRICE PATTERN but the problem is that TECHNICALLY this pattern needs a clear BREAK before we can understand what market wants to do.

It is a TRIANGLE PATTERN ON INTRADAY CHART OF BANK NIFTY

As we all know two mega events are on the cards one is the annual budget and the other is the RBI POLICY MEET both these events will have significant impact on banks and market as a whole.

We will have to wait for this pattern breakout before identifying trend direction.

For BANK NIFTY a clear hourly close above 10650 and below 10250 in the next Week could be a BREAK of this TRIANGLE PATTERN.

For NIFTY a break above 5460 or below 5268 will be a short term trend decider event.

For the next Week NIFTY has supports at 5279 and 5195 from a different technical tool also these support comes from the 8/13 WEEK EMA BAND

As can be seen on this WEEKLY chart this band has been in buy mode since January and these EMA VALUES now are at 5279 and 5195 so both values becomes very good support for next Week.