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Saturday, April 27, 2013

BSE Sensex and NSE Nifty 50 index chart patterns – Apr 26, 2013

BSE Sensex index chart

Another truncated week of trading didn’t cool down the buying fervour of FIIs. Despite selling by DIIs, the Sensex rose to cross and close above the blue down trend line (marked by down arrow). A week earlier, the index had bounced up from the ‘gap’ area formed back in Sep ‘12 (marked by up arrow).

The index is trading above all three EMAs; the 20 day EMA has bounced up from the 200 day EMA and is getting ready to cross above the 50 day EMA. Looks like the three months long bear phase is coming to an end.

One more technical hurdle remains in the path of the bulls. The level of 19760 had acted as a resistance during Feb and Mar ‘13. Crossing 19760 will negate the current bearish pattern of lower tops and lower bottoms.

SENSEX_Apr2613

Daily technical indicators are looking bullish, but a bit overbought. MACD has moved up sharply above its signal line, and entered its positive zone. ROC is inside its overbought zone, and turning down. RSI is on the verge of entering its overbought zone. Slow stochastic is well inside its overbought zone.

The drop from the Jan ‘13 peak (20204) to the Apr ‘13 trough (18144) corrected 41% of the entire rise from Dec ‘11 to Jan ‘13, and 46% of the rise from Jun ‘12 to Jan ‘13. Both those numbers are close to the 50% Fibonacci retracement level that is often treated as the LOC (Level of Control) between bulls and bears.

If you have been waiting patiently for the index to fall to much lower levels, your wait may be never–ending. Bears can try to put up a fight to keep the index below 19760. Expect some consolidation before the index moves higher.

NSE Nifty 50 index chart

The NDA is up to its old trick of stalling parliamentary proceedings and demanding the PM’s resignation due to one scam or the other. Coal block allocation is the latest. Important bills are getting delayed or postponed indefinitely.

A massive ‘chit-fund’ scam in West Bengal has drawn the Left parties and the ruling TMC into a blame game while the poorest of the poor have been fleeced. Falling interest rates of small savings schemes at post offices lured many into the trap of various chit-funds. Central government financial regulatory agencies have once again been caught napping.

Nifty_Apr2613

The weekly bar chart pattern of Nifty shows a breach of, and close above, the blue down trend line. Don’t be misled by the apparent lower volume bars of the last two weeks – which had only 4 trading days each due to holidays.

Weekly technical indicators are beginning to turn bullish. MACD has started to move up in positive territory, but remains below its falling signal line. ROC has crossed above its 10 week MA, and looks ready to enter positive territory. RSI is moving sideways below its 50% level, after bouncing up from the edge of its oversold zone. Slow stochastic is rising towards its 50% level.

The blue uptrend line connecting the lows of Dec ‘11 and Jun ‘12 wasn’t tested. A new (slightly steeper) up trend line connecting the Jun ‘12 and Apr ‘13 lows may need to be drawn if the Nifty moves above its Mar ‘13 top of 5970.

Bottomline? Chart patterns of BSE Sensex and NSE Nifty 50 indices have crossed and closed above their down trend lines. Respective Mar ‘13 tops will be hurdles that bulls need to cross before regaining control. One can add to their positions selectively, and add more once the Mar ‘13 tops are crossed.

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