We have wrapped up our market for the week. We open on Monday now; hopefully the policymakers won’t have any surprises for us over the weekend. So Monday opening would be more a continuation of how daddy Dow closes on Friday and cousin Nikkei opens up on Monday, till then enjoy the weekend. I am off for vacation with family and will be back on Tuesday so writing the weekend views today itself (my friend Ilango has a complaint that I post late).
The first chart up for post mortem is the weekly chart of Nifty shown below. The latest weekly candle looks more like a reversal candle. This particular candle has done two things; one it has jabbed at the falling trend line (thick black line) and attempted to reclaim the highs made on July 2007. The flip side is that we have closed below the 50% retracement. Speaking of retracements (marked on the chart) the 38.2% and 23.6% are exactly at those levels which we have been talking about quiet often; 4370 (most likely to be probed, tested and hold) and 4150 respectively. Between these two we have 4250 a strong support.
Moving on to the daily chart we have a red candle which has just closed in the vicinity of the long term falling trend line(again thick back line) and the Cradle I had mentioned in my previous posts. Nifty is more likely to test 4350/4400 zone, as on the daily chart we have a trend line support their along with the rising 20 period Moving average. The MACD histogram has been tracing a bearish divergence; on the other hand the MACD lines still have to give a crossover sell signal. The most important aspect of this chart is that we still have our sequence of HH and HL intact. To logically assume a trend reversal, we have to make a new lower low or take out the previous HH (both pivots shaded on the chart). Anything in between is what we call congestion or a consolidation. This is more likely to be the scenario as suggested by the flat ADX!
This brings us to the micro chart; the hourly. Here we have broken out of the rising wedge and my wolfee of course. We have a Double Top (confirmed by breaking of the HL pivot between them) and with both the 20 and the 50 period MA’s overhead we should be following the path of least resistance and that happens to be the trend line support (another cradle there!) and the 200 period MA below.
I WONT BE UPDATING THE BLOG FOR NEXT FOUR DAYS. WISHING YOU ALL, A VERY HAPPY
"To establish true self-esteem we must concentrate on our successes and forget about the failures and the negatives in our lives."
Dennis Waitley
Wolfee & the double top patterns are being felt in the prices now..Wishing you a great time with the family at Shimla and back home too..Bye
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