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.