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.