Weekly analysis for 9th - 13th November

Sensex gapped up on friday but it closed the gap and closed below opening low.
Weekly candle in past week formed a thursting line, with its high at 16284 and low at 15330. The week was a roller coaster week. upward Thursting line is a bearish in downtrend. If sensex has to move upwards, it needs to show a good followup above 16284. Above 16284, the resistance is at 16413(50%) retracement of entire fall, above that the gap in the daily chart at 16700 will still be a resistance. Sensex needs to cross this range to continue uptrend. The kst oscillator is crossed below zero, the 5 day fast oscillator is at 80, nearing overbought zone. sensex has support at 15900 and 156009100 DMA). The stratergy could be to book longs and sell on rallies if sensex is not able to go past 16400 and then 16700.

Possibility of circuit?

If I say there would be a circuit down on sensex coming, this may be exagurated, but I wont be surprised if there is a panic on Tuesday 3rd November for indian markets. On Friday sensex failed to sustain the initial gap up because of US rise on Thursday. Intrestingly Dow itself made faster retracement by falling 250 odd points against thursday's rise of 200. It shows that there may be more fall coming on US market on Monday. Also there is CIT bankruptcy looming on US market. This may cause dow to fall on monday, so there is every possibility of big gap down on tuesday in India.

16k to be crucial for sensex

As mentioned in previous blog, sensex is showing head and shoulders pattern im 30 minutes chart, if it is so, the neckline is already broken and currently sensex is near crucial support of 16600, if sensex breaks 16600 the next level would be 16400-16500 and then 16000. 16k is also previous top and it is the target of head & shoulder retracement taking from top 17200.
However sensex can take support at 16k keeping the bulls hope alive, but if it breaks there will be panic we can see levels much below.Even if sensex holds 16k and tries to move upward the rally is becoming weaker and weaker.

head & shoulders in sensex half hourly chart?

See at the right side of the image, it looks like and head and shoulder in half hourly chart of the sensex, if it breaks the neckline, there it can prove disaster for the sensex.

is this a top?

Sensex made a high of 16820 on Thursday 17th September and then came back to 16610 on friday and closed at 16741 and closed positive to keep uptrend intact.

Following are the points which could be in favor that top is already in place
1. more than 80% of analysts are calling for more upward rally of nifty atleast till 5050 to 5150
according to theory of contrary opinion market alwaysd does opposite to conceseus
2. There is a complecency among long traders who beleieve that there would be no surprise from global markets and they are ready to bet their long positions even with long weekends
3. Few weeks ago china led fall of global markets for couple of days, after that there was a bounceback. On friday China fell more than 3% indicating new leg down might have started, but all other markets ignored that, these could prove dangeorous
4. Several signalslike KST are showing negative divergence i.e. though sensex is moving to new high signals like KST are near to zero/
5. The rate of rise per day for sensex is just 100 points per day in this rally of 20 days from 14700 as compared to the last rallies

These are indications that the top atleast a short term is already in place, however as far as trading is concerned untill and unless there is a confirmation of weakness we should be with the trend...

daily analysis for 13th Sep

As shown in 30-minute chart, it can be assumbed that we are in g leg of diametric, starting from 15046, g leg is assumed to be containing 2 correctives, 1st one as shown in the chart was extracting triangle and 2nd is also being devloped as extracting triangle. Its c?,d?,e? are marked. ? is added to the c,d,e because the end of triangle is not yet confirmed.

we can few scenorios devloping which will confirm the wave structure.

Option 1. On Monday its gaps down below friday's low and goes below opening low, then we can confirm that entrie extracting triangle is ended with g leg ending, which can start the bigger fall.

Option 2 shown in green line e still continues upward, but remains less than c and then cuts bd in faster time then we can confirm that entrie extracting triangle is ended with g leg ending, which can start the bigger fall.

Option 3 gaps down but holds bd? trendline and then rise upward It will have 2 possibilities either c continues upward which will shift c? or it can end d at bd? trendline and then scenario builds as per option 2. In case of it shifts c, then c ideally should not end at the parrallel line, because then it will call for complex corrective within c

Option 4 It gaps up, then it will be similar to option 3

Daily chart chartacle is same as of last time

Analysis for 7th September

As shown in 2nd chart i.e. half hourly chart On friday sensex held thursday's low and formed a bull candle, when everybody was bearish.

It confirmed that earlier wave D inside bigger g leg of diametric. d leg can be considred as double combination, the pattern implication of this wave can be 80% As shown in above chart E leg started on friday, it can move 80% of D which is approximately 15837, also to keep extraction logic live, E leg needs to be less than C leg, so it should not move beyond 15890, if it is extraction triangle, sensex should immediately retrace E leg with faster retracement downwards. If E leg moves above 15890 or next leg does not retrace E leg faster, we can assume that diametric is forming which can have F & G leg after e ends. This small diametric would be G leg of bigger diametric. If it is a diametric sensex can move above 16k. The pattern implication of ending triangle of bigger F wave is around 16200 to 16500. generally last leg of any formation ( G leg of diametric in this case) itself forms the same formation.

As shown in daily chart the sensex is forming G leg On friday sensex took support exactly on line joining d-f to keep alive bull's hopes. G leg has already taken 10 days, earlier legs of this diametric have taken 11 to 18 days, if we consider that, sensex has till around 7 days to complete G wave. After G wave ends it needs to be seen whether this leg ends the rally or it is a running correction and rally continues which will prove bulls victorious.

Following points are in favour that after g the rally will end.
1. If you compare a, c, e leg of the diametric in daily chart, the rise is 1078 points per days, 171 points per day and 163 points per day respectively for g till now the rally is only 86 points per day only, this shows that Though sensex is forming new highs the strength of the rally is decreasing with each leg of thge diametric
2. The FIIs have started becoming sellers in last week.
3. Crude oil has fallen to $67 from $75.
To keep continuing the rally after g leg the above points need to be reversed.

Analysis for 2nd September

Analysis: The action formed a bear pattern like a hammer, sensex again failed to cross over its previous resistance of 16k, it shows clear defeat of bulls at resistance levels and again showed that market always surprised when everybody was so bullish on monday

Half hourly chart shows that an extracting triangle forming as a part of last wave of the diametric g leg, where rally gets smaller and fall gets bigger since low of last week's friday. Today's fall action looks like D leg after initial rally ended as C leg. Inside C leg appears as irregular flat c failure, which has implcation of atleast 1.618 times of b leg starting from c leg i.e. D leg should go to atleast 15329 as shown in the chart, after that E leg should follow which should end the g leg of the diametric and then proceed with the fall as shown in red line

Daily chart shows continuation of g leg of diametric, g leg confirmed as non impulsive since it broke 0-b line yesterday. sensex formed low today exactly at the trendline joining march low and low of d and f of diametric. Can sensex give a pullback as it has done since last 3 months from this trendline or break the trendline after completion of g leg going as shown in red line respecting seasonal fall of september month. September always have been a falling month in world market...

Chart prediction for 31st August 2009

Daily chart & half hourly chart
Analysis: As shown in daily chart on Friday it formed a bull candlestic pattern, with its high on 15957.67 and low at 15663, Index closed at 15922. Nifty made a 2009 year high, but sensex just missed its high of 2009 i.e. 16002. The volumes were good, its a bullish indication.
On half hourly chart the correction formed between last Tuesday and Friday was a running correction to the rally from 14835.08 to 15677.80 appears to be a running correction with its low is near to the rally's high. If we consider rally as 1 and correction to its rally as 2, This gives target of atleast (15677.80-14835.08) = 842 + 15663 = 16505, or 842*1.618 + 15663 = 17025 in a week's time, the chart prediction is shown in red line.
On Daily chart the rally from last yesterday's high can be still considered as g leg of diametric as shown in daily chart which has target of 16500 - 17k. The g leg can take time of 7 or 11 or 18 days, which are luca's number. As the earlier legs of the current diametric have taken 11 or 18 days, of which only 5 days are completed. The chart prediction is shown in red line, which is also a 0-2 line of the current rally from last friday.

Chart prediction for 31st August 2009

Daily chart & half hourly chart

Analysis: As shown in daily chart on Friday it formed a bull candlestic pattern, with its high on 15957.67 and low at 15663, Index closed at 15922. Nifty made a 2009 year high, but sensex just missed its high of 2009 i.e. 16002. The volumes were good, its a bullish indication.

On half hourly chart the correction formed between last Tuesday and Friday was a running correction to the rally from 14835.08 to 15677.80 appears to be a running correction with its low is near to the rally's high. If we consider rally as 1 and correction to its rally as 2, This gives target of atleast (15677.80-14835.08) = 842 + 15663 = 16505, or 842*1.618 + 15663 = 17025 in a week's time, the chart prediction is shown in red line.

On Daily chart the rally from last yesterday's high can be still considered as g leg of diametric as shown in daily chart which has target of 16500 - 17k. The g leg can take time of 7 or 11 or 18 days, which are luca's number. As the earlier legs of the current diametric have taken 11 or 18 days, of which only 5 days are completed. The chart prediction is shown in red line, which is also a 0-2 line of the current rally from last friday.

Analysis for 27th August

Review of 26th August

The action formed long legged DOJI indicating indecisiveness, also showing resistance at high of 15831, which achieved the target of measuring gap from 15276-15363. On 30 minute chart it broke the rising trend line and closed below the trend line by making lower highs and lower lows. It shows a resistance near to previous high. Sensex could come back again to yesterday'support 15423 or 15276, if it is not able to cross today's high, for bull case sensex need to cross today's high. Today was the 3rd day of g leg of diametric as shown in daily chart. This leg can take 7 or 11 days which is Luca's number as taken by previous legs. Also bigger targets for this leg could be 16k to 16600 which are 75% to 125% retracement of largest leg of previous fall which was considered as contracting triangle. Tomorrow being expiry could be volatile.

S&P gives sell signal on friday 14th August

S&P gives a sell signal on friday with MACD crossover on daily chart.

Sensex Analysis for 17th August

Analysis: Sensex showed indecision on friday with a candle inside last day's candle. support is at friday' low 15368, 15208 which is Thursday' low, as well as Thursday's gap. The resistance is at 15545, If these support holds sensex has target of 15709-15740 as mentioned in earlier analysis. The 5 days oscillator is still at overbought condition which may indicate profit booking at higher level. If sensex crosses 15970 by tomorrow, it will indicate faster retracement of last wave.
On medium term if we join March low with 13220, it almost coincides with last week low of 14700. It forms an important medium trndline and sensex has to obey this trendline to move up. Medium term shows a bow tie corrective diametric shape on sensex daily chart from election rally, which has 7 lags i.e. expanding triangle in first half and contrating shape in second half. The sensex is within the range of 13k to 16k for past almost 4 months and it requires a huge buying to go past 16k. Very short term sensex may show some upside, but as and when it approaches to 16k bulls would have to be very careful.

Daily view on Sensex/Nifty for 13th August

Analysis on Daily chart : It was a gap up day i.e. Belt hold Line type on candlestic chart. The gap of (15208-15044) = 164 points is visible on Daily Sensex chart. Generally according to my experience points of gap are traveresed from the high/low in the diection of gap as long as Gap holds in daily chart. i.e. (15545-days high + 164) = 15709 becomes the next target for the sensex as long as the gap holds. The sensex also closed above the 13 day moving average. The sensex always has taken the support of 13 day moving average since the rally from March. Only 2 times it had breached the average since March. Once from Budget and 2nd time after heating 16k. Now as long as the sensex is above 13 DMA, it will be bullish.
The sensex has traversed 67% of the fall from 15970. If we considered 80% retracement it is 15715 is the next target, which is closer to 15709 mentioned above. However 5 day fast Oscillator is now at 96 nearly overbought condition.
Wave structure wise if rally started yesterday crosses 15970 in faster time, it will mean that it is a same part of wave that started from 13220 and reached 16k, because fall from 15970 to 14701 took only 4 days, wherease rally from 13220 to 16k took 18 days, which does not satisfy principle of similarty for new wave. For downturn to continue it needs to retrace the last segment of the 2 days rally in faster time.

Most important learning in Technical Analysis

I have been learning technical analysis since 3 years and making profits and losses in trading.
When I look back to find out what would be my most important learning in TA till now.
I considered various stratergies as learning, but most important learning is to always have alternate structure ready if expected structure goes wrong. You may not plan for expected stratergy, because any way you will be in profits, but alternate analysis/wave structure has to be ready to avoid huge losses. Huge losses happen in panic and Panic always happens if you come across any unexpected things. Nature always surprises us and Stock Market is Nature of trends. It will always show that history repeats, and one of thing it repeats is it always surprises everybody including you. Hence you should be always ready with alternate wave structure/trend assumming that the trend wont go in your favor.

Lucas Number

What Are Lucas number?
The Lucas numbers are an integer sequence named after the mathematician François Édouard Anatole Lucas (1842–1891), who studied both that sequence and the closely related Fibonacci numbers (both are Lucas sequences). Like the Fibonacci numbers, each Lucas number is defined to be the sum of its two immediate previous terms, i.e. it is a Fibonacci integer sequence. Consequently, the ratio between two consecutive Lucas numbers converges to the golden ratio(1.618). However, the first two Lucas numbers are L0 = 2 and L1 = 1 instead of 0 and 1, and the properties of Lucas numbers are therefore somewhat different from those of Fibonacci numbers. The sequence of Lucas numbers begins:
2, 1, 3, 4, 7, 11, 18, 29, 47, 76, 123

How are they significant?
1. Their ratio which is same as that of fibbonacci numbers i.e. 1.618 0r 0.618 forms a support and resistance levels for dips and rallies respectively
2. In many cases it can be found that a signifcant top or bottom is made in the timeframe since the rally or dips start.
e.g. Top of 10482 was formed on sensex on 7th Jan 2009 after 47 days from bottom 27th October 2008
e.g. Bottom of 18th march 2008 was made after 47 days from top of 10th January 2008

My first blog

This is my first blog. My name is Sarvesh Damle, leaving in Thane maharashtra, India.
I am BE in Electrical Engineering. I have been studying and practicing technical analysis for sensex as well as stock market subject for past 3 years. I have read n number books in the same subject. The word Chartacle derived from "Chart" + "Oracle" i.e. predicting the charts of various stocks/commodities. This word was originated from my discussion with Mr. Vivek patil, elliot wave analyst in India. I have learnt a lot from him in this subject.
I will try to write as much as I can in this blog.