Sensex:
Last Week’s Highlights
Our Comments: The reasons for positive bias on the markets, in the near term, despite of strong bearish sentiments are: a) The Sensex has formed bullish hammer pattern which indicates a rejection at lower levels, b) After a consistent fall the Sensex has created a huge ‘falling gap’ at 15526-15202 area, but we suspect this gap could turn out to be an ‘exhaustion” gap i.e. end in the minor trend, c) Our proprietary tools indicates a short term recovery if the Sensex “closes” above 15202. As such expect a bounce till 15526 i.e. an attempt to ‘fill” up the falling gap. If sustain above this then only we can expect a meaningful recovery towards confirmation of ‘e’ wave.
For the medium term trend, the Sensex should not fall much below 14677 or say 14500. Once its start trading below 14.5k, the more serious downtrend will open towards next target objective of 13779 and then 12316.
Actual Movements: The Sensex created a new low at 14645, slightly below the previous low of 14677, and recovered, as expected, on the “fundamentally” adverse news. Yesterday it has created a high 15553, as against our expectation of 15526.
Current Week Previewed
Highlight: In the near term, the bulls are likely to continue their recovery attempts. Watch 15553 on the upside, if sustained then expect 15770-15950 in the next few trading sessions. Else, range trading between 15500-15180 area. Overall, the large degree weakness persists and as of now the market is in a trading range.
Detail Analysis:
The Sensex has failed to defend the (previous) panic low of 14677 (18th March) and created a new low. Further, it has also completely retraced the previous rally from 14677to 17735 in a faster time; as against 29 trading sessions for rise, the new low has been created in 25 trading days.
By rule, faster retracement indicates a significant top has been created at 17735. The larger degree uptrend is ruled out till this level is surpassed.
On the daily charts, the Sensex has exactly bounced back from the lower end of the parallel channel (see chart) and seen recovery attempts by the bulls. Near the lower end of the channel the “street” was nervous and seldom thought of recovery, but it happened, as the market has a penchant of making deceptive moves. Since then, in a corrective up move, so far, the Sensex has gained over 900 points. There could be further positive attempt by the bulls but for that the Sensex needs to close & sustained above 15553, i.e. yesterday’s high.
If it does, then expect continuation of the corrective rally till 15770-15950 seen. If it fails to sustain above 15553, then expect a range trading in 15500-15180 area for a while before deciding future course of action.
For the long term trend, as discussed in the above Para, 17735 is a ‘roof’. On the downside 14300-14500 area is likely to act as a ‘last resort’ for the bulls. If the Sensex drops below 14260, the possibility of extracting triangle will be ruled out and further downside will be opened, towards the target objective of 13779 or even 12316. Trade accordingly.
By rule, faster retracement indicates a significant top has been created at 17735. The larger degree uptrend is ruled out till this level is surpassed.
On the daily charts, the Sensex has exactly bounced back from the lower end of the parallel channel (see chart) and seen recovery attempts by the bulls. Near the lower end of the channel the “street” was nervous and seldom thought of recovery, but it happened, as the market has a penchant of making deceptive moves. Since then, in a corrective up move, so far, the Sensex has gained over 900 points. There could be further positive attempt by the bulls but for that the Sensex needs to close & sustained above 15553, i.e. yesterday’s high.
If it does, then expect continuation of the corrective rally till 15770-15950 seen. If it fails to sustain above 15553, then expect a range trading in 15500-15180 area for a while before deciding future course of action.
For the long term trend, as discussed in the above Para, 17735 is a ‘roof’. On the downside 14300-14500 area is likely to act as a ‘last resort’ for the bulls. If the Sensex drops below 14260, the possibility of extracting triangle will be ruled out and further downside will be opened, towards the target objective of 13779 or even 12316. Trade accordingly.
