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What is left?

August 7, 2008

Indian markets today face a strange question?
Which way will it move?
Up, Down, Sideways, Nowhere, Everywhere, Elsewhere.They were some
of the answers when I asked people around me

[Click To Enlarge]

Which case is it bro?

Which case is it, bro?

Interestingly, charts are showing an immensely curious case. After months of being in the red, the last three weeks have shown a bit of recovery. Drawn in red is the resistance trend line. Green is the support line and the time period is weekly tics.

The 30 share Sensex seems to be drawing some strength from the past weeks rally and has shown some recovery to actually bang on the resistance levels.
Indicators are showing, the dismal picture, Sensex presently is. Tremendously sold but showing some signs of recovery. %R just recovered from the hell of -100 levels[man! is anything at all left?] and rallied smartly to -50 levels.
Same with 14 weekly RSI, it has shown some welcome relief from lower 30 levels.

But what is immensely interesting is now the price action. The price action for the next week will what decide everything.

There are two hypothetical cases forming:

1. Case 1: Sensex breaches the 15,073 levels comprehensively in the next week and posts a higher pivot high.In fact today’s [6th August] rally pattered out on account of hitting this resistance level. The bears heavily sold and bulls scampered due to the lack of confidence. The result the rally which in the morning showed all signs of breaching the trend, closed on the weekly charts as just grazing the trendline.

What is needed is one more positive week, which will comprehensively breach the trend line and close above 15072 levels.  After which bulls will find themselves back in confidence and some help from stronger hands

2. A less likelier situation is Case II which will drag all those tired indicators even more. %R and RSI[14] will again hit all time lows. And perhaps the price action will test mid 13k levels.

On the back of all this, the TRIX levels are showing some curious behaviour . Anybody interested in decoding and concluding with rest of the indicators?


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