TECH VIEW

SENSEX: despite having shown a GLOOMY picture on monthly charts a short term rally was expected and it is here.

The first HURDLE of the BEARISH GAP has been crossed by both SENSEX & NIFTY and SENSEX even closed above the RESISTANCE TRENDLINE.

The 5/8/13 EMA BAND which is in sell mode must turn up to give a buy cross then we can have more faith in this up move.

16962 becomes the new SUPPORT for SENSEX and it has got RESISTANCE at 17318.

NIFTY: an analyst must FOLLOW the SHORT TERM TREND first even if there is something WRONG on LONG TERM CHARTS.

Doing this i said here that if NIFTY sustains above 5149 one can go long and there will be a stronger up move if NIFTY can cross 5164-5197 ZONE which was the BEARISH GAP.

Once above 5149 it was all bullish and NIFTY has closed at 5199.

This can be a solid TREND REVERSAL DAY but one must take care at 5255-5267 levels and then at 5300

5149 is the new support as to maintain bullishness NIFTY MUST NOT close below 5149.

WEEKLY CHART BOOK

TECHNICAL VIEW FOR THE SENSEX AND NIFTY FOR THE WEEK STARTING FROM 30^TH JULY 2012:

Another month is about to end with a dismal note.

We had a good CANDLE reversal pattern last month but unfortunately SENSEX & NIFTY could not produce a strong up move to confirm a good bottom suggested by the single TECHNICAL TOOL called BULLISH ENGULFING LINE

Enough signs of further WEAKNESS but there will be some corrective up side again and the STRENGTH and WEAKNESS of this move will give us more clues in the future of our markets.

5267 was our CUT OFF LEVEL for longs and once that level was gone NIFTY plunged almost 200+ points in almost 10 working days.

5164 is the FIRST NIFTY LEVEL to watch for this week.

5267-5300 will be a very critical zone of RESISTANCE to watch for next couple of weeks

This zone is more critical in the context of MONTHLY CHARTS as well because i am trying to show you a DANGEROUS PRICE PATTERN unfolding on the MONTHLY SENSEX CHART.

This pattern has the potential to drag SENSEX towards nearly 12000 in the medium term BUT DO REMEMBER that the pattern gets COMPLETE ONLY ON THE BREAK OF THE NECKLINE.

It is a TOP HEAD & SHOULDER.

Also note that i am not suggesting to go short right now as this pattern may take a few more months to unfold also this pattern is developing on MONTHLY CHARTS so we shall have ENOUGH TECHNICAL EVIDENCES on other LOWER TIMEFRAME CHARTS to TIME the CRASH if this pattern is going to complete in the near future.

I REPEAT the PATTERN COMPLETION is on the BREAK OF the NECKLINE.

For the SHORT TERM there is still some hope as if someone remember my last WEEKLY CHART BOOK LEVELS , i had suggested 5096 as THE trend decider level on WEEKLY basis and NIFTY has managed to close the week at 5099 after making a low of 5032 my next support was 5016.

For SENSEX the WEEKLY LEVEL was 16815 and SENSEX has closed the week at 16839.

The DANGEROUS HEAD&SHOULDER structure will have its impact later on but for the SHORT TERM as on WEEKLY CHARTS we can not negate the possibility of a HIGHER BOTTOM as of now so watch next few weeks and my TECH VIEW as we will try to understand how & when THE TOPPING PATTERN will unfold or not.

For the coming week first zone of RESISTANCE will be 5164-5197 for NIFTY AND 17047-17129 for SENSEX and we will get FIRST SIGN of a healthy up move if BOTH INDICES can manage a close above this RANGE in first two days.

Confirmation of a STRONG HIGHER BOTTOM will come if NIFTY CAN CLOSE ABOVE 5267-5300 and if SENSEX CAN CLOSE ABOVE 17342-17467.

Failure to do this will be considered a negative sign for even the short term future.

On the DAILY CHARTS the FALLING TRENDLINE will also be a STRONG RESISTANCE to watch in the coming week.

DAILY TECH VIEW :

SENSEX: THE BREAKOUT ZONE of earlier double bottom pattern is around 16550 and that was a clear support zone as can be seen on SENSEX EOD CHART

And on the weekly basis i had shown 16815 as a crucial level to watch and SENSEX closed the week above 16815 and made a low of 16598.

A sustained move above 16975 today can take SENSEX towards 17047-17129 zone which is a STRONG RESISTANCE ZONE.

Watch if SENSEX can close this GAP and one can go long if this happens.

NIFTY: NIFTY found support around 5020 and managed to close the week above 5096 but important levels for today and tomorrow will be 5164-5197.

If NIFTY sustains above 5149 it may try and touch this zone and one can go long for the SHORT TERM if NIFTY shows sign of closing above 5197.

If NIFTY can close above 5197 it will also give a close ABOVE the TRENDLINE RESISTANCE.

5149 and 5096 will be the STOP & REVERSE LEVELS if there is a long initiated on a NIFTY CLOSE above 5197.

A HAMMER

SENSEX: the WEAKNESS continued in the early morning trade but there was a sudden recovery from the lows and SENSEX established a new support at 16736

SENSEX completed a CANDLESTICK PATTERN called A HAMMER which can be a potential BOTTOM FORMING PATTERN but it needs a STRONG FOLLOW UP.

In our case a SENSEX close above 16962 and better above 17047 can be termed as a good follow up of THE HAMMER.

A few days sideways move facing RESISTANCE at the BEARISH GAP at 17129 and the down move may resume again.

There is a STRONG TRENDLINE RESISTANCE as well.

NIFTY: when a fall starts any INDEX starts developing RESISTANCE LEVELS in the way of the fall.

In our case while NIFTY started to move down and created two BEARISH GAPS which will be strong resistance zones first one between 5267-5300 and second one between 5164-5197 and in adiition to them there is a FALLING TRENDLINE which will be a resistance as well.

So if a pattern called HAMMER as on yesterday can become a BOTTOM provided NIFTY can close above 5164-5197 in next two days.

A new SUPPORT at 5076 but a failure to close above 5197 and NIFTY may resume the down trend again.

WEEKLY CHART BOOK

dear readers, sorry for delay in posting weekly chart book.

TECHNICAL VIEW FOR THE WEEK AHEAD :

There is no major change in my TECHNICAL VIEW for the week starting from 23^rd july 2012.

STOCHASTIC has turned down from overbought zone on WEEKLY CHARTS suggesting the downward bias

Although from the CANDLESTICK point of view the WEEKLY CANDLE was a STAR which suggests mild indecisiveness at SUPPORTS.

5128 for NIFTY and 16905 for SENSEX are two important support levels which are 38.2% retracement levels of the last rally.

A low at 5016 for NIFTY and 16553 for SENSEX are very critical lows and below this one must not HOPE for significant bullish ness too soon.

BULLISH GAP around 5159 did give some support but NIFTY FAILED to cross 5267 and SENSEX failed to cross 17342 on DAILY CHARTS which is first sign of WEAKNESS on daily charts.

So for the next week watch these levels for the BULLS to regain some control again ELSE we will a lot more down side to open up during the week.

EMA BAND sell cross is the cause of concern for our markets

Also daily charts of a few major stocks like LARSEN /AXIS BANK /TATA MOTORS/INFY suggests extreme weakness and also the recent up move in these and many other stocks look a WEAK CORRECTIVE only.

WEEKLY & DAILY TECHNICAL VIEW

WEEKLY CHART BOOK  :

TECHNICAL VIEW OF SENSEX & NIFTY FOR THE WEEK AHEAD :

Before we look at TECHNICAL POSITION of charts as at the end of the last week i feel we should have a look at the last few months movement of our markets.

A BIG down side correction was started in OCTOBER 2010 which seemed to have ended at 4538 for NIFTY and at 15135 WHEN there was huge one side BULLISH MOVE came from DECEMBER 2011 and lasted till the last WEEK of FEBRUARY 2012

One would have easily EXPECTED our markets to continue uptrend after some correction but within a very few days of the start of correction i mentioned in my DAILY & WEEKLY TECHNICAL VIEWS that SENSEX and NIFTY should reach up to 80% retracement levels.

And both INDICES did reach their RESPECTIVE 80% RETRACEMT LEVELS of the WHOLE up move of DECEMBER –FEBRUARY.

And NOW after the UPMOVE that came in LAST FIVE WEEKS has reached a very CRITICAL STAGE.

I had suggested first TARGET OF NIFTY as 5378 which NIFTY missed by a few points for SENSEX i had advised to have caution at 17667 .

Caution was being advised as STOCHASTIC was in overbought zone on BOTH DAILY & WEEKLY CHARTS.

In my opinion our markets are at crucial and decisive stage as if the SMALL RECENT DOWN MOVE is ONLY A SMALL CORRECTION OF the recent FIVE WEEK up move then NIFTY must not BREACH 5096 AND SENSEX must not BREACH 16553 on closing basis in coming weeks.

In the coming WEEK IF NIFTY and SENSEX can regain the BEARISH GAP at 17329-17467 for SENSEX and at 5300-5261 for NIFTY and if SENSEX can produce a close above 17467 and if NIFTY can give a close above 5300 the recent up move may continue further

There will be an ATTEMPT from bulls as now STOCHASTICS is getting oversold soon.

BUT if the small correction continues further and takes NIFTY below 5096 we are in for a more COMPLEX CORRECTIVE for some more time to come.

DAILY TECH VIEW :

SENSEX: the BROADENING CHANNEL STRUCTURE is still intact in both SENSEX & NIFTY.

The STOCHASTIC is now near to oversold zone ON DAILY CHART which can trigger one bounce back

First indication of a positive move will come if SENSEX can sustain above 17343 and there will be some good STRENGTH if SENSEX can produce a CLOSE above the BEARISH GAP at 17467.

One can go long if SENSEX closes above 17467 again.

NIFTY: after the BIG DOWN GAP we did not see any severe down day in the last week so there is a chance that the recent short term down move can be a small correction only.

5257-5263 remains important RESISTANCE ZONE for very short term and as STOCHASTICS is nearing oversold zone and as NIFTY is still within the BROADENING STRUCTURE bulls will try for one more leg on the up side.

First indication of such an up move will be when NIFTY can sustain above 5263 for at least an hour.

Next confirmation will be if NIFTY can actually close above 5300

Go long if NIFTY moves beyond 5300 on any day in next few days.

CHARTS :

TECH VIEW 12TH JULY 2012

SENSEX : an INTERESTING broadening channel has been drawn on SENSEX chart

With SENSEX failing to cross 17687 on closing basis even after a big positive candle on Tuesday is not a good sign.

Watch for the LOWER END of the drawn channel to work as support if the down move initiates again.

A CLOSE below 16343 will be the first sign on NEGATIVE MOVE coming up as such a CLOSE will clearly negate the BULLISH SETUP that the up move on Tuesday created.

NIFTY: missing 5378 by a few points on TUESDAY and then not able to produce a follow up move is a cause of concern

But the positives of TUESDAY will be NEGATED ONLY if NIFTY closes below 5255 in a day or two.

STOCHASTIC position is an issue as well , as it is in overbought zone even on WEEKLY CHART.

BROADENING CHANNLE has been drawn on NIFTY CHART and if NIFTY CLOSES below the LOWER END one must liquidate longs.

WEEKLY CHART BOOK

TECHNICAL VIEW FOR THE NEXT WEEK STARTING FROM 9^TH JULY 2012:

I wrote this in my WEEKLY CHART BOOK last week

“  So now onwards it will be A BUY ON DIPS as one by one all TIMEFRAME CHARTS are turning up.

16800-16653 for SENSEX and 5093-5041 for NIFTY are our new STOP & REVERSE on closing basis.

Here is a CHART of NIFTY which was posted in one of my earlier TECH VIEW just a few days back where I had given NIFTY TARGETS of up to 5442 if 5020 is held “

So it was A BUY ON DIPS for the whole last week and everytime NIFTY CORRECTED there was some buying interest coming up

BUT there was not a big positive closing at the end of the last week and as we observe the NIFTY & SENSEX moves last few days we are back in a VERY SMALL RANGE back again

The PRICE STRUCTURE is a RUNNING STRUCTURE AND again this kind of a STRUCTURE can and will produce a BIG CANDLE again early next week on EITHER SIDE.

LEVELS to watch for such an anticipated BIG DAY ahead :

If NIFTY crosses 5339 it will soon touch 5378 and there will be a blast above 5378 for SENSEX if it trades above 17570 it will move to 17687 and bulls will be in full control if SENSEX can cross 17687

On the DOWN SIDE if NIFTY breaches 5263 i expect a big move can take NIFTY quickly up to 5194 for SENSEX EXPECT 17131 IF IT TRADES below 17363.

The above levels can be for the next few days but the TREND DECIDER LEVELS are 5095 and 16815 on the down side.

 The bias remains on the up side

For SENSEX TARGETS UPTO 19805 are possible even if the whole phase from OCTOBER 2011 is corrective in nature

For NIFTY the first TARGET ZONE is 5419-5499 next will be 5640 but a move up to 5900 is also possible.

So ideally we would see some sort of SMALL down side move only to be bought aggressively.

FOR THE DAY :

SENSEX:SENSEX continues to be in a very small range

The price structure of last few days again signals towards a BIG CANDLE very soon on either side

For day traders low of 17423 and 17363 are supports and if SENSEX moves below these levels it will be first sign of weakness

Overbought STOCHASTICS on both DAILY & WEEKLY CHARTS is a cause of concern and buyers must wait for this indicator to come down to enter longs.

17667 is the up side RESISTANCE as of now.

NIFTY: it was BUY ON DIPS alright but neither NIFTY dipped much nor it bounced much from the lows that shows how tight the RANGE for the recent few days has been for NIFTY.

5287 and 5263 are two levels to watch as support and SHORT TERM TREND DECIDER levels

5378 is the next immediate RESISTANCE to watch and i presume we will have a BIG CANDLE on either side very soon.

Day traders should not remain long below 5263 and positional traders should liquidate longs below 5263 and must wait for the STOCHASTICS to come in to oversold zone.

TECH VIEW

SENSEX:a small CORRECTION as expected in SENSEX.

If one recalls my TECH VIEW a few days back I wrote that ideal situation would be a BREAK ABOVE 17120 then a mild correction would be better entry for longs

17371 is a good support for the day and SENSEX should reach 17667-17684 first and looking at two previous HIGHS there some profit booking may come around there.

NIFTY:for today NIFTY has support at 5263 and then at 5239 caution is advised for very short term if NIFTY closes below 5239

On the up side 5378-5384 are two levels to watch for some profit booking

5442 is next NIFTY target in coming days.

We will see some consolidation at higher levels looking at the overbought STOCHASTICS on WEEKLY chart.

WEEKLY CHART BOOK

WEEKLY TECHNICAL ANALYSIS OF SENSEX & NIFTY:

For SENSEX my critical RESISTANCE LEVEL was 17120 and I had drawn a clean RESISTANCE ZONE on SENSEX chart A MONTH BACK and after initial struggle SENSEX opened with a BULLISH GAP exactly at this level as one can see this chart.

There were some bad news from RBI as there was no RATE CUT there was some real fear about the FINANCIALS OF EUROPE but despite all this SENSEX & NIFTY did not breach certain KEY SUPPORT levels

Then there was a chart pattern called A “ DIAMOND” , for a TECHNICAL ANALYST patience is the key as at times markets does not give a very clear clue but gives some HINTS only so I advised to wait for the BREAK OFF the DIAMOND pattern BUT bias WAS positive AND positive hint also came from RISING ADX and nearly oversold STOCHASTIC on EOD CHARTS.

So these few were positive HINTS markets passed on to us.

Another positive was the developing price pattern on MONTHLY CHARTS of both SENSEX and NIFTY which was described almost 15 days back and infact because of the huge surge on the last day of the MONTH the pattern which was TO BE A “PIERCING LINE” turned out to be a “ BULLISH ENGULFING”which is more positive for our markets.

SENSEX MONTHLY 290612:

Here is how this Japanese candle stick chart pattern is described in books on the subject:

Definition of 'Bullish Engulfing Pattern'

A chart pattern that forms when a small black candlestick is followed by a large white candlestick that completely eclipses or "engulfs" the previous day's candlestick. The shadows or tails of the small candlestick are short, which enables the body of the large candlestick to cover the entire candlestick from the previous day.

In our case it is MONTHLY CHART of SENSEX instead of the DAILY CHART as described above.

 

Also I expected a BIG CANDLE to come up soon and once NIFTY opened with a GAP above 5159 there was no look back for the day

So now onwards it will be A BUY ON DIPS as one by one all TIMEFRAME CHARTS are turning up.

16800-16653 for SENSEX and 5093-5041 for NIFTY are our new STOP & REVERSE on closing basis.

Here is a CHART of NIFTY which was posted in one of my earlier TECH VIEW just a few days back where I had given NIFTY TARGETS of up to 5442 if 5020 is held

One BIG BULLISH CANDLE was needed and both SENSEX and NIFTY ended the last WEEK & MONTH with a big BULLISH CANDLE as a break not only above the important RESISTANCES but also as a break off the DIAMOND pattern on daily charts.

For SENSEX TARGETS UPTO 19805 are possible even if the whole phase from OCTOBER 2011 is corrective in nature

For NIFTY the first TARGET ZONE is 5419-5499 next will be 5640 but a move up to 5900 is also possible.

So ideally we would see some sort of SMALL down side move only to be bought aggressively.

This SENSEX chart speaks it all

SENSEX WEEKLY TARGETS 290612:

The RESENT up move now looks to be the FIRST LEG OF NEW BULL PHASE especially as this upmove had RETRACED EXACTLY 80% of the OCTOBER 2011-MARCH 2012 RALLY.

Another supportive TECHNICAL TOOL is the BULLISH ENGULFING candle reversal pattern on MONTHLY charts and OVERSOLD STOCHASTICS ON QUARTERLY CHARTS.

a TRADING SYSTEM ON EURO-USD CHART