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Saturday, April 28, 2012

NIFTY: Rethinking scenario

If you look at my below 2 posts , I was extremely bullish , calling for 5630 and even 5885 by may end. I had completely overlooked on of my most favourite indicators , 13 period Bollinger Bands in weekly chart.

I was also wrong to go LONG  for the last 2 weeks as once the market breached the  MID BB level , it was bound to hit the lower level and it was hit this week. So i should have waited for this Friday atleast.

One can see that many a times we hit the upper level exactly to do a reversal. And so last Jan-Feb rally also hit the
upper level and correction started. The upper band was stretched a bit because it was a fast rally.

The JAN -FEB rally was also similar to 2010 end year rally. And the correction now also looks similar. I have marked the points  1,2...till 6. The raly stopped at 1 and then travelled till 2 breaching the MID BB level.But the lower BB level was not touched . So the markets went up to hit the MID BB level at 3 . And then finally came to hit the lower BB Level at 4. Then it rallied 75% exactly of the 1-2 fall. Only to go down fast till 6 , which is 66.7% , BB lower level,34 week SMA.

Now the same thing looks to be happening. One difference is that point 3 now managed to close above MID BB level. but the 1-2 fall was also slower than 2010 1-2 fall. But the point is once it came down MID BB ,  it was bound to hit the LOWER BB , even if it manages to close above MID BB . So no longs should have been taken by me atleast till last FRIDAY.

So now it seems , point 4 is done and we are ripe for a rally to 5500 which is 75%  of 1-2  fall , which also coincides with UPPER BB. the rally may also go only till 5467 which is 66.7% of 1-2 fall. And then i expect a fall towards 6 which is 50% of the whole rally , 34 week SMA ( light blue) and 13 BB Lower level also at the same place , which is 5110.

One may easily say , that the same scenario might not play again. Well i got one more clue why i think that next 5 and 6 points should come in next 1 month period.

The below WOLFE WAVE shows a target of atleast 5450 in Nifty futures. I think that will go a little more than that to hit 5500 level. So that should be our point 5 . And every Wolfe wave target hit also sees a good reversal , And usually the reversal point reaches point 3 atleast. Here The point 3 is at 5172 in NF. I already stated 5110. So we can take average of 5172 and 5110 , as 5135 to be our point 6 target.  The below Wolfe wave took 23 candles in NF to form . So i expect target to be hit in around 11 trading days.

The DEFTY charts in previous post also giving a high target and time is mid May.

 And now to show that we should not fall anymore from here, I used this pitchfork chart to show that we are at good support.
We can easily see how well these parallel lines are acting as supports and resistances.. These lines are parralel to the Median line with the crucial point 1 shown in the chart.

For now i have given up hope of seeing 5880 . the 13 BB weeky chart shows that upside is capped at 5500 atleast for a month period may be.

Wednesday, April 25, 2012

DEFTY Wolfe wave characteristics

I like DEFTY charts because they give a far more clearer picture than the Nifty with perfect touches of trendlines and clear geometric patterns.

Lets take a look at this Wolfe Wave from last year October-November period.

The above was a clear nice Wolfe Wave and the target was hit at point labelled A. But unlike Nifty , DEFTY doesn reverse after hitting the WOLFE WAVE TARGET LINE. Instead it moves futher to point B. Now the from the point 1 till 5 number of days was 20. Now from point 5 , the wolfe wave target line was hit at A in 11 days. SO it took one day more half the number of days it took from 1-5  to hit target line .

Another thing to be noted is how far DEFTY travels even after hitting target line.It travelled 76.4% of the distance from 5 to A.

Heres another Wolfe Wave in Defty from NOVEMBER -December period last year.

Again from point 1 till 5 it is a total of 50 trading days. From point 5 to A , where the target line was hit, it took 26 days, again 1 more than half of the 1-5 days. In this case too the DEFTY doesnt reverse on hitting the target line but continues to travel. In this case AB is just a little bit more than 61.8% of 5-A distance.

And now I think we have another Wolfe wave in DEFTY .

The target line shows that we have a good 450+ point move coming in DEFTY.And 1-5 takes 32 days . So i think the target line is going to be hit by May 18. And just as in the previous 2 cases, DEFTY should move even further by 61.8% to 76.4% . So i think we have a good up move in DEFTY till  4th week of May.

My best guess is that if and when that DEFTY target line is HIT , NIFTY should see previous high of 5630 by 3rd week of May. And considering DEFTY extends its journey like before, Nifty has a good chance of reaching 5885--5930 by May 25th.

Taking a look at the latest NIFTY charts , it found support exactly at the trend line joining 5074 and 5134 lows. Also at the 89 SMA. Awaiting bullish crossover of 89 and 233  sma(red ).

Today is the 89th day from the december 4531 lows and this should be significant.

I include the dollar chart as well as I have analysed DEFY. The trend line from September 1st last year has been broken and its almost 8 months ( fibo number) . This has increasedthe chances of a significant trend change in the dollar.

We have big IPO coming up in the neighbourhood . So atleast till then I dont expect major trouble for world stocks

Tuesday, April 24, 2012

Nifty ::Target forecast

This correction is taking a toll on me. I thought this was over looking at the 5 leg Triangle  but it has just completed a seventh leg. Never mind. This is the market after all. The important thing is understanding the nature of the market . After a fast rise in Jan-Feb I stil feel this was a correction and we are about to embark on the next move higher. If you look at the below monthly chart we see that we have a tremendous contraction in price with decrease in volume.

Most of the time , contracting triangle resolves in the direction prior to the contracting period. This is why i am bullish. It looks like 5180 will not be broken and markets wont trade below it  till month end.  And that would make this pattern valid.

Lets us see from 2 recent such  formations what targets were achieved in each of the cases.. This is the first one from october last year . huge and fast upmove. Followed by a triangle correction . The crorection could not achieve even 38.2% . So this relates to more bullishness in the market . And the next move up was a little more than 150% but a little less than 161.8%.

The next one is within this massive correction itself. We had a fast downswing from 5600+ level. The ab leg was corrected by exactly 50% by bc. Since the correction was more than the previous case ,  the momentum towards the downside in this case was less than what the momentum upwards was for the previous case. And that shows up in the length of the target achieved by the next leg of the down fall which achieved only 123.6% extension . So the next leg length depends on the depth of the correction.

So now let us look at the current massive correction  on the monthly chart . We had a correction of just a little less tha 50% . So lets take a target of 123.6% extension which is 5884. Thats is a big one and if it comes it will be sensational.

Lets see what happens in May . After a contraction an expansion should come and we should see in May 1st week itself .

Monday, April 23, 2012

S&P:2011 and 2012

I think the current setup in S&P is very similar to the one  ast year just before the big August fall.

This chart from 2011 May-June.

This chart from the current market .

So I expect a bounce fomr tomorrow or Wednesday back towards the old highs of 1400-1410 through May 

Wednesday, April 11, 2012

Nifty -Correction over

Well I think thats about it . The correction succeeding the fast rise we had in Jan-feb starting in Feb-23 is over according to these 13 BB bands as the lower level has been hit  . Now it may happen that we might see some downmoves tomorrow too , from the current levels, but the chances of a serious downfall is not there . The most we can move down is 5180 in Nifty futures. So now on the bull side.

Monday, April 2, 2012

BB 13 update and other patterns.

BANDS dont lie.....granted it was not an exact touch of the lower band when we went low this time...but still these bands were the only thing that told me that market direction was down when confusion another touch of the top ....and since 1)...we have touched upper level...2).WW target HIT....3)rally built on short covering as OI has been decreasing ..........So now we should see another good down move....but not expecting the 5135 low in NS though.

Now I got some fractals which can be useful. First the current upmove in hourly chart .

Now watch a couple of daily charts from past .

One more from sometime back .

In both of the daily charts , we got around 75% of the rally retraced. I am expecting a simlar move in this rally. Also we see that the consolidation area is broken easily . The lower level of the consolidation area of current rally is at 5308 in futures chart. So expecting to break that .