Last 3-4 weeks, I am arguing for a "recovery" in the global stock markets, based on 'macro' level technical analysis of this 'in house' World Index (WI). This week, I maintaining my pending bullish reversal stance, despite of a 15% drop since the beginning of the month.
The current month, so far, has not created a fresh low visa-a-vis the month of October (see inlaid monthly chart). As such there is a possibility of "double bottom" formation, here, provided we should not see a fresh "down move" from the present level. Further the index is almost there at previous consolidation zone (Jan-May 2005), normally such crucial zones created in the up move acts as "support" zones in subsequent down moves.
On the weekly chart, the price moves are still intact in the falling parallel channel (3rd) & a move beyond 329 (value for the coming week) i.e. break above the upper end of the channel is required for the first stage confirmation of reversal in the trend.
The current month, so far, has not created a fresh low visa-a-vis the month of October (see inlaid monthly chart). As such there is a possibility of "double bottom" formation, here, provided we should not see a fresh "down move" from the present level. Further the index is almost there at previous consolidation zone (Jan-May 2005), normally such crucial zones created in the up move acts as "support" zones in subsequent down moves.
On the weekly chart, the price moves are still intact in the falling parallel channel (3rd) & a move beyond 329 (value for the coming week) i.e. break above the upper end of the channel is required for the first stage confirmation of reversal in the trend.
On the daily charts, I am suspecting a "triangle'"(14 Oct is a starting point) with "a" wave ending at 286 (27th Oct); wave "b" retracing 80% of wave "a"; & the current fall could be wave "c". The wave 'c' has unfolded exactly within the falling parallel channel, and a move beyond the upper end of the channel can confirm the end of the wave "c", thereby opening wave "d" on the upside. Even if we assume the end of the wave "c" is still away, notice that the last 2 trading sessions are very close to the lower end of the parallel channel, which in anyways suggests an up move at least till the upper end of the channel. In short, the WI is at very crucial point, as far as all the 3 time frames(Monthly/weekly/Daily) are concerned; holding the Oct low (i.e. 27th Oct) would lead to 'significant' up move in the next few weeks/months. Let see how the things unfolds.
