Saturday, November 14, 2009

BSE Sensex Index Chart Pattern - Nov 13, '09

The level of 16412 mentioned last week didn't prove much of a hurdle as the BSE Sensex chart pattern sailed past it on Mon, Nov 9 '09. It also went above both the 20 day and 50 day EMAs as the bulls fought back strongly, aided by FII inflows.

The 20 day EMA provided good support during the rest of the week, but the short-term average failed to move away from the 50 day EMA. The upward momentum slowed down from Wed, Nov 11 '09, even as the Sensex made new highs every day.

The index gained 690 points (nearly 4.3%) for the week, but the three months bar chart pattern of the BSE Sensex index hasn't quite shaken off its corrective mood:-


The 20 day and 50 day EMAs are moving sideways, close together. The Sensex is above both, and well above the rising 200 day EMA. The long-term bull market is in no trouble.

The slow stochastic is looking quite bullish. It has smartly moved above the 50% level. The MACD has also moved up nicely above its signal line, but still remains in the negative zone. The RSI has moved up to to touch the 50% level, but the MFI remains below the 50% level.

The lower volume on Fri, Nov 13 '09 and the wide gap between the 50 day and 200 day EMA may lead to another down leg of the correction from the top of 17493 made on Oct 17 '09. The slowing upward momentum of the BSE Sensex chart as it came near the 17000 level is another point of concern.

Bottomline? The BSE Sensex chart pattern had broken down from a bearish 'rising wedge' pattern, and may correct some more. Partial profit booking is advised. Watch for FII buying. That can always negate the sluggishness in the charts.


S N Vaish said...

I have my openion that atleast upto 20.11.2009 market may remain bullish, this bullishness may extend upto Nov Clearing also.

Subhankar said...

Quite possible, specially if the FIIs continue to be net buyers.

It may help other readers if you explain why you expect the bullishness to continue.

S N Vaish said...

I have projected datas of 14 days RSI, simple MACD of 10-40 days, it's triger line, exponental MACD and divergence for further few days,presuming that if present levels remains unchanged then what will be directions of these indicators,
it shows that RSI will be at peak on 23.11.2009, triger line of simple MACD will remain rising upto 20.11.2009, exponental divergence will remain rising upto 17.11.2009, exponental MACD (26,12,9) will remain rising upto 26.11.2009.
My practical experience of many years said that till triger line of simple MACD will rmain rising, market will not fall,
this calculation can fail only if FIIs will start huge net selling, There shall be no impact of DIIs net selling. Parabolic Sar on Daily Chart is also bullish. past 4 weeks averages of highs is 5016.60, hence close above this level will confirm bullish trend continuation for longer period, and this bullish trend will remain continue till nifty will remain trading above 4 weeks simple moving average.
Earlier fall in Oct 09, had started from the date when nifty had came bellow 4 weeks simple moving average.
This all I am saying on the basis of my practical experience. I never like Elliot Wave strictly because, it has many times failed.

Subhankar said...

Appreciate the detailed comments.

In a volatile market, present levels can't remain unchanged. Projecting levels of technical indicators like RSI and MACD may then become an exercise in arithmetic.

But I won't be surprised if the bullishness extends till the last week of Nov '09, as you have suggested. A lot depends on when the FIIs start selling.