Indian Stock Market Detailed Technical Analysis with Chart studies
Stock-Markets / India May 15, 2010 - 08:26 AM GMTBy: StocksBuddy
As stated in our analysis from previous analysis, market did rally back from the oversold levels. Though market did bounce back, it once again found resistance at the center line of BB which runs around 5200. Market took cues from global rally and echoed the same here. However, towards the end of the week, all the enthusiasm waned. EUR, got a facelift on monday with a $1trillion bailout in Europe. However, it gave up all of the gains from monday and actually has broken down big time during the week.
US markets too ended up on a sour note on friday and Asia is expected to open flat to negative on monday because of this.
A lot of action took place last week.
Nifty once again found support outside of the lower Bollinger bands. Each day nifty went down, it had a long hammer. This clearly suggests that nifty does not really want to go down, but is going down because of reasons beyond it's control, viz. global conditions. This shows the relative strength of nifty. The question everyone has been asking is whether this is just a minor correction or is it start of a new downtrend. Looking at weekly chart, it doesn't bode well with Bulls right now as we have a "Shooting Star". Good news in this bad one is that nifty closed positive for the week.
Nifty once again found support outside of the lower Bollinger bands. Each day nifty went down, it had a long hammer. This clearly suggests that nifty does not really want to go down, but is going down because of reasons beyond it's control, viz. global conditions. This shows the relative strength of nifty. The question everyone has been asking is whether this is just a minor correction or is it start of a new downtrend. Looking at weekly chart, it doesn't bode well with Bulls right now as we have a "Shooting Star". Good news in this bad one is that nifty closed positive for the week.
Technically Speaking:
Take a look at the Daily Nifty chart below.
The above chart uses TD Demark indicators extensively. Positives:
- Looks like a bottoming process.
- RSI going down the hill and pretty fast. However, we may be pretty close to a bottom as it forms a divergence.
- MACD too is pretty much similar to RSI and is potentially in the process of making a positive divergence.
Next Week:
As we stated in our previous commentary, things are extremely messed up and nothing is really clear as to which way things are going to go. In the above chart, we have drawn some trendlines that are very important to look out for, viz. 5200 and 5275 (as of this writing). Once nifty crosses these two, then we will see new highs or at least a test of 5400. The chart below is the ratio chart of Indian VIX (Volatility index) to Nifty. This chart shows the correlation between Volatility and the moves in Nifty. The lower this chart, the higher the chances for Nifty to move up and vice-versa. This chart is in a very strong uptrend, meaning lower prices for nifty ahead of it. However, if you notice TD Demarker (circled below) each time it touched 80 and started trending lower, it market a short term top. Likewise, TD REI has had clear divergence before we noticed a move one way or the other.
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Have a Wonderful Trading Week ahead.
Regards
Disclaimer: At the time of this writing, neither the authors nor our team held any positions on any securities unless otherwise explicitly stated. All information above is only for educational purposes and you are responsible for your own actions.
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