In a holiday-curtailed trading week, FIIs were net sellers of equity during the first three days, but net buyers on Thu. (Feb 20). Their total net buying was worth Rs 8.56 Billion. DIIs were net sellers of equity on Mon., Tue. and Thu. (Feb 17, 18 and 20), but net buyers on Wed. (Feb 19). Their total net selling was worth Rs 5.73 Billion, as per provisional figures.
On a YoY basis in Jan '20, India's passenger vehicle, commercial vehicle and two-wheeler registrations contracted by 4.6%, 6.8% and 8.9% respectively. Registrations for three-wheelers and tractors grew by 9.2% and 5.1%.
As per ASPA, India's counterfeit auto parts market was worth Rs 1 Trillion in 2019 - adversely affecting the automobile industry. Selling spurious parts results in a tax revenue loss of Rs 22 Billion to the government.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex oscillated about its 20 day and 50 day EMAs, while trading sideways within a range of 800 points during a truncated trading week. The index managed to close above the 41000 level, but lost about 90 odd points on a weekly closing basis.
Daily technical indicators are in neutral zones - not giving any directional signals. MACD is moving sideways above its signal line. RSI is treading water near its 50% level. (Since Nov '19, MACD and RSI have been showing negative divergences by forming bearish patterns of 'lower tops, lower bottoms'.) Slow stochastic is rising towards its 50% level after falling below it.
After touching a lifetime high of 42274 on Jan 20th, and forming a large 'reversal day' bar (higher high, lower close) that often signifies an intermediate top, the index has been consolidating sideways within a 'symmetrical triangle' pattern.
Sensex may also be completing a two months long 'diamond' pattern. A 'symmetrical triangle' or a 'diamond' pattern can act as a continuation pattern. But they can also act as 'reversal' patterns.
So, will the index breakout upwards or downwards? The negative divergences visible on MACD and RSI - which have touched lower tops for the past four months - may tilt the balance towards bears.
Small investors should keep their bullish bets small and stop-losses tight. It may be prudent to wait for the eventual breakout - which should happen sooner than later - before placing any large buy or sell orders.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty closed above its three weekly EMAs and the psychological level of 12000, but lost about 30 odd points on a weekly closing basis. A bullish pattern of 'higher tops, higher bottoms' - formed during the past 18 months - shows that bulls are dominating.
The index has failed to make any upward progress since touching a lifetime high of 12430 four weeks back. Nifty needs to cross convincingly above 12500 for the bull rally to progress further. However, a slowing economy and a rapidly spreading corona virus has negated bullish fervour.
Weekly technical indicators are looking neutral to bearish. MACD is sliding down below its signal line after falling from its overbought zone. RSI has moved above its 50% level but its upward momentum has stalled. Slow stochastic has crossed above its 50% level after falling below it.
Nifty's TTM P/E has moved up a bit to 27.50, which is well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) is oscillating about the edge of its oversold zone, hinting at more near-term index consolidation.
Bottomline? After touching lifetime highs in Jan '20, Sensex and Nifty charts have been consolidating sideways. With the budget and Q3 (Dec '19) results out of the way, very few positive triggers are left for the stock market in the near-term. Investors should stay invested, but maintain stop-losses.
Gold chart pattern
The daily bar chart pattern of Gold shows three clearly identifiable consolidation patterns - a 'falling wedge', a 'rectangle' and a 'symmetrical triangle'. All three patterns formed after the 'golden cross' of the 50 day EMA above the 200 day EMA technically confirmed a bull market.
After breaking out above the 'symmetrical triangle' on Wed. Jul 17, gold's price touched a 52 week high of 1454 on Thu. Jul 18. Note that all three technical indicators showed negative divergences by touching lower tops, which triggered a pullback to the top of the 'triangle'.
Daily technical indicators are in bullish zones after correcting overbought conditions, but are not showing much upward momentum. MACD is moving sideways below its falling signal line. RSI is hovering just below its overbought zone. Slow stochastic has bounced up after slipping below its 50% level.
The US Dollar index has been consolidating sideways between 96.40 and 97.20 since Jul 5. Gold's price consolidated sideways in tandem. After touching a low of 96.40 on Jul 19, the Dollar index has been climbing towards 97.20.
On longer term weekly chart (not shown), gold’s price closed well above its three rising weekly EMAs in long-term bull territory. Weekly technical indicators are inside their respective overbought zones. Some price correction or consolidation may follow.
Silver chart pattern
The daily bar chart pattern of Silver consolidated within a bullish 'flag' pattern from which an upward breakout occurred on Mon. Jul 15. Rising volumes propelled silver's price to a 52 week high of 16.62 on Fri. Jul 19 before profit booking caused a fall just below 16.20.
Silver's price has since bounced up to close just above 16.40, and well above its three EMAs in bull territory. The 'golden cross' of the 50 day EMA above the 200 day EMA has technically confirmed a return to a bull market.
Daily technical indicators are looking bullish and overbought. MACD and RSI are rising inside their respective overbought zones. Slow stochastic is correcting inside its overbought zone - hinting at some near-term price consolidation or correction.
On longer term weekly chart (not shown), silver's price tested resistance from its 200 week EMA, and closed well above its 20 week and 50 week EMAs in a long-term bear market. Weekly technical indicators are looking bullish and showing upward momentum.
Gold chart pattern
Note the following comments from the previous post on the daily bar chart pattern of Gold: "Formation of a 'reversal day' bar (higher high, lower close) with a surge in volumes have put a temporary halt to the rally. Some correction/consolidation can be expected after a hectic rally."
Gold's price consolidated sideways within a small 'symmetrical triangle' for two weeks before a downward breakout occurred on Fri. Jan 18th. The 20 day EMA provided support - as it has done since the beginning of Dec '18. However, the support may not hold for long.
Daily technical indicators are in bullish zones, but looking bearish and showing downward momentum. MACD has crossed below its signal line and is ready to drop from its overbought zone. RSI and Slow stochastic are falling towards their respective 50% levels.
Gold's price may fall to the 'support/resistance zone' between 1260 and 1270 - where some support can be expected. A further fall and a test of support from the 200 day EMA can't be ruled out.
On longer term weekly chart (not shown), gold’s price closed above its three weekly EMAs in long-term bull territory for the fourth straight week. Weekly technical indicators are in bullish zones. MACD is rising above its signal line. RSI has started to correct above its 50% level. Slow stochastic is falling inside its overbought zone.
Silver chart pattern
Note the following comments from the previous post on the daily bar chart pattern of Silver: "After falling just short of the 16.0 level intra-day, silver's price has made a temporary retreat to 15.76. A pullback towards the 200 day EMA is a possibility."
Since then, silver's price has been in a down trend (marked by purple trend line). On Fri. Jan 18th, a test of support from the 200 day EMA was followed by a close below the 20 day EMA for the first time in 7 weeks.
Daily technical indicators are looking bearish after correcting overbought conditions. MACD has crossed below its signal line and is poised to drop from its overbought zone. RSI is falling towards its 50% level. Slow stochastic has dropped below its 50% level into bearish zone. A fall below the 200 day EMA is on the cards.
On longer term weekly chart (not shown), silver’s price closed above its 20 week EMA, but below its 50 week and 200 week EMAs in a long-term bear market. Weekly technical indicators are turning bearish. MACD is rising above its signal line in neutral zone. RSI is falling towards its 50% level. Slow stochastic is correcting inside its overbought zone.
WTI Crude Oil chart
The daily bar chart pattern of WTI Crude Oil has been in a down trend since touching a high of 75.30 on Jul 3. Within the down trend, oil's price consolidated sideways within a 'symmetrical triangle' pattern.
An expected downward breakout from the 'triangle' on Aug 8 was followed by a pullback to the lower edge of the 'triangle'. Bears may use the pullback to sell.
Oil's price is trading above its 200 day EMA in a bull market. However, the 20 day EMA has crossed below the 50 day EMA - which is a bearish signal in the near term.
Daily technical indicators are in bearish zones. MACD is falling below its signal line. RSI is sliding down below its 50% level. Slow stochastic has bounced up a bit after getting support from the edge of its oversold zone.
Bullish factors like potential supply disruptions due to US sanctions on Iran oil and drop in output from Venezuela are being countered by bearish factors like a strong US Dollar and a ramp-up in production by OPEC.
On longer term weekly chart (not shown), oil's price closed below its 20 week EMA, but above its rising 50 week and 200 week EMAs in long-term bull territory. Weekly technical indicators are showing downward momentum. MACD is falling below its signal line in bullish zone. RSI is seeking support from its 50% level. Slow stochastic is falling below its 50% level.
Brent Crude Oil chart
The daily bar chart pattern of Brent Crude Oil has been in a down trend since touching a high of 79.51 on Jul 10. Below the down trend line, oil's price rallied twice - forming bearish 'flag' patterns from which downward breakouts occurred.
Oil's price is trading above its 200 day EMA in a bull market. However, the 20 day EMA has crossed below the 50 day EMA, and both are sliding down - which is a bearish signal in the near term.
Daily technical indicators are in bearish zones. MACD has merged with its signal line and is moving sideways. RSI is moving sideways below its 50% level. Slow stochastic has bounced up after getting support from the edge of its oversold zone.
On longer term weekly chart (not shown), oil's price closed below its 20 week EMA, but above its rising 50 week and 200 week EMAs in long-term bull territory. Weekly technical indicators are looking bearish. MACD is falling below its signal line in bullish zone. RSI is seeking support from its 50% level. Slow stochastic has dropped to the edge of its oversold zone.
S&P 500 index chart pattern
The following remark in last week's post on the daily bar chart pattern of S&P 500 may be worth noting: "A convincing move (i.e. accompanied by strong volume support) above the 'gap' is required for the index to rise to new highs."
The downward 'gap' (formed on Jan 30) was completely filled on Mon. Aug 6. The next day, the index opened with an upward 'gap' to touch a high of 2863 - just 10 points short of the lifetime high of Jan 26 - but lacked strong volume support.
Bears used the opportunity to stall the rally. On Fri. Aug 10, the index opened with a downward 'gap' and dropped to seek support from its 20 day EMA before closing with a weekly loss of 7 points.
Daily technical indicators have corrected overbought conditions, and are showing downward momentum. MACD is about to cross below its signal line. RSI is falling towards its neutral zone. Slow stochastic has dropped from its overbought zone. All three showed negative divergences by failing to rise higher with the index.
Some more correction or consolidation is likely. Expect the support/resistance zone between 2780 and 2800 to provide good support on the downside. In case the index corrects further, the upper edge of the large 'symmetrical triangle' should provide stronger support.
On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market, but formed a 'shooting star' candlestick that can trigger a correction. Weekly MACD and RSI are in bullish zones but not showing any upward momentum. Slow stochastic has started to correct inside its overbought zone.
FTSE 100 index chart pattern
After touching a lifetime high of 7903.50 on May 22 '18, the daily bar chart pattern of FTSE 100 has been consolidating sideways and straddling its 20 day and 50 day EMAs. The index is trading above its gradually rising 200 day EMA in a bull market.
Bears are selling on every rise, while bulls are buying the dips. For the past two months, the index has formed a bullish pattern of 'higher bottoms and higher tops' - possibly in anticipation of a favourable BrExit deal with the EU.
Daily technical indicators continue to look neutral to bearish. MACD and RSI are in neutral zones and showing slight downward momentum. Stochastic is falling towards its 50% level.
On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market. Weekly MACD has crossed below its signal line in bullish zone. RSI is falling in bullish zone. Slow stochastic is falling below its 50% level.
WTI Crude Oil chart
After breaking out below a 'diamond' reversal pattern, the daily bar chart pattern of WTI Crude Oil has been consolidating sideways within a 'symmetrical triangle' pattern. The 50 day EMA is bisecting the 'triangle'.
A 'triangle' is usually a continuation pattern. So, the likely breakout should be below the pattern. However, a 'triangle' is also an unreliable pattern. Since the pattern has formed above the rising 200 day EMA in a bull market, an upward breakout can't be ruled out.
It may be prudent to wait for the breakout before initiating any buy/sell action.
Daily MACD and RSI are in neutral zones, and not showing upward momentum. Stochastic is rising above its 50% level. (At the time of writing this post, oil's price has retreated a bit after facing resistance from the upper edge of the 'triangle'.)
On longer term weekly chart (not shown), oil's price received support from its 20 week EMA, and closed above its three weekly EMAs in long-term bull territory. Weekly technical indicators have corrected overbought conditions, and are showing downward momentum in bullish zones. A bit more consolidation is possible before a breakout from the 'triangle'.
Brent Crude Oil chart
The following comment appeared in the previous post on the daily bar chart pattern of Brent Crude Oil: "Slow stochastic is seeking support from the edge of its oversold zone, and can trigger a technical bounce."
The expected technical bounce turned into a 2 weeks long rally that has formed a bearish 'flag' pattern, from which the likely breakout is downwards.
Oil's price is trading above its rising 200 day EMA in a bull market. A downward breakout from the 'flag' may not lead to a deep correction.
Daily technical indicators are turning bullish. MACD has formed a bullish 'rounding bottom' pattern, and crossed above its signal line in bearish zone. RSI has moved up to its neutral zone. Stochastic has entered its overbought zone, and can trigger a correction.
On longer term weekly chart (not shown), oil's price closed above its three weekly EMAs in long-term bull territory. Weekly MACD is falling below its signal line in bullish zone. RSI has bounced up after receiving support from its 50% level. Stochastic has bounced up after receiving support from the edge of its oversold zone.
S&P 500 index chart pattern
The following remarks were made in last week's post on the daily bar chart pattern of S&P 500: "A convincing breakout above the 'triangle' and a move above the 2800 level will put bulls back on track to regain control of the chart. Bears will try to make their progress as difficult as possible."
The index broke out above the down trend line of the large 'symmetrical triangle' on Mon. Jul 9, but without a significant increase in volumes that would have technically validated the breakout.
Though the index rose higher on Tue. Jul 10, it failed to reach the 2800 level. A pullback to the down trend line on Wed. Jul 11 was followed by an upward bounce that just about managed to close above 2800.
Daily technical indicators are in bullish zones. MACD is rising above its signal line. RSI and Slow stochastic are moving sideways. All three are showing negative divergences by failing to rise higher with the index.
Some consolidation or correction is possible. The index is trading above its three rising EMAs in a bull market. A convincing move above 2800 is likely to face resistance from the 'downward gap' formed back in Jan '18.
On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones, but showing negative divergences by not rising higher with the index.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 had touched a lifetime high of 7903.50 on May 22 '18. Since then, it had been trading within a downward sloping channel (also called a 'flag').
By not dropping to the lower edge of the 'flag', the index was expected to breakout above the 'flag'. It did so on Mon. Jul 9, only to pull back inside the 'flag' on Wed. Jul 11 - where it received support from its 50 day EMA.
The subsequent upward bounce was again not accompanied by a surge in volumes (not shown) that would have technically validated the upward breakout. (At the time of writing this post, the index has pulled back to the top of the 'flag'.)
What had looked like a bullish 'flag' pattern is now beginning to look more like a 'saucer' or a 'cup and handle' pattern. Both patterns - if they get formed - have bullish implications. The index is trading above its three EMAs in a bull market.
Daily technical indicators are looking neutral to bullish. MACD and RSI are moving sideways in neutral zones. Slow stochastic is in bullish zone, but not showing much upward momentum.
On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are showing downward momentum in bullish zones.
S&P 500 index chart pattern
For more than 5 months, the daily bar chart pattern of S&P 500 has been consolidating sideways within a large 'symmetrical triangle' pattern. The rising 200 day EMA indicates that the long-term bull market is very much alive.
From Apr '18 onwards, the index has formed a bullish pattern of higher tops and higher bottoms inside the 'triangle'. (At the time of writing this post, the index is testing resistance from the upper edge of the 'triangle'.)
In a holiday-shortened trading week, the index touched an intra-day low (below its 20 day and 50 day EMAs) of 2699 on Mon. Jul 2, but rallied to touch an intra-day high (above its 20 day and 50 day EMAs) of 2764 on Fri. Jul 6. Volumes were on the lower side.
Daily technical indicators have turned bullish. MACD has emerged from bearish zone, and is about to cross above its falling signal line. RSI has moved above its 50% level. Slow stochastic has risen sharply from its oversold zone.
A convincing breakout above the 'triangle' and a move above the 2800 level will put bulls back on track to regain control of the chart. Bears will try to make their progress as difficult as possible.
The index is trading above its three EMAs in a bull market. So, the advantage remains with bulls. However, their 'best laid plans can go awry' due to Trump's trade war with China, Europe, Canada, Mexico, India.
On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones, but not showing any upward momentum.
FTSE 100 index chart pattern
After touching a lifetime high of 7903.50 on May 22 '18, the daily bar chart pattern of FTSE 100 has been correcting/consolidating within a bullish 'flag' pattern, from which the likely breakout is upwards.
Note that the index faced resistance from its 20 day EMA and fell below its 50 day EMA every day last week, but did not fall to the lower edge of the 'flag'. That increases the possibility of a breakout above the 'flag' soon.
(At the time of writing this post, the index is trading above its three EMAs and testing resistance from the upper edge of the 'flag'.)
Daily technical indicators are looking neutral to bullish. MACD and RSI are moving sideways with slight upward biases in their respective neutral zones. Slow stochastic has crossed above its 50% level.
As and when the index breaks out above the 'flag', note whether there is a surge in volumes. That will technically validate the upward breakout.
On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators have corrected overbought conditions, but remain in bullish zones.
S&P 500 index chart pattern
The following remarks appeared in last week's post on the daily bar chart pattern of S&P 500: "Slow stochastic has dived below its 50% level, and may be hinting at a further fall in the index towards its 50 day EMA. As long as 2680 is not breached, the past 3 months' bullish pattern of 'higher tops, higher bottoms' will remain intact."
The index started trading on Mon. Jun 25 with a downward 'gap' below its 20 day EMA and closed below its 50 day EMA. For the rest of the week, the index oscillated like a yo-yo - getting support from the 2700 level and facing resistance from 'GAP 2'.
On Thu. Jun 28, the index touched an intra-day low of 2692 but closed above 2700. The 2680 level has not been breached. The past 3 months' bullish pattern of 'higher tops, higher bottoms' remains intact. But for how much longer?
The past 5 months' trading appears to have formed a large 'symmetrical triangle' pattern. A fall towards the lower edge of the 'triangle' may be on the cards. What if the index falls below the 'triangle'? The possibility can't be ruled out - and long positions should be squared off in that event.
Daily technical indicators are in bearish zones, but not showing much downward momentum. Slow stochastic is inside its oversold zone, and can trigger a technical bounce. A convincing move above 2800 will put bears on the defensive.
On longer term weekly chart (not shown), the index received support from its 20 week EMA, and closed above its three weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones, but turning bearish. MACD is about to cross below its signal line. RSI is about to fall below its 50% level. Slow stochastic is poised to drop from its overbought zone.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 had touched a lifetime high of 7903.50 on May 22. Since then, the index has been correcting/consolidating within a 'flag' pattern above its 200 day EMA.
Such a 'flag' usually has bullish implications. In other words, the likely breakout from the 'flag' is upwards. When? That is a good question. A typical 'flag' consolidation lasts anywhere from 5 to 8 weeks. 5 weeks have elapsed within the 'flag' already. So, a breakout can be expected within the next couple of weeks.
Daily technical indicators are in bearish zones, but not showing much downward momentum. Some more near-term consolidation within the 'flag' is possible. (At the time of writing this post, the index is trading 50 points lower within the 'flag'.)
On longer term weekly chart (not shown), the index bounced up after testing support from its 20 week EMA, and closed above its three weekly EMAs in a long-term bull market. Weekly technical indicators are correcting overbought conditions, but remain in bullish zones.
During the week, FIIs were net sellers of equity worth Rs 2.8 Billion as per provisional figures. However, they were net buyers of equity on Tue. Mar 6 and Fri. Mar 9.
DIIs were net buyers of equity worth Rs 1.3 Billion for the week, but they were net sellers of equity on Mon. Mar 5, Tue. and Fri. Sensex and Nifty lost about 2.2% each on a weekly closing basis.
Loan disbursals to India Inc. are taking a hit at this crucial time of fiscal year end as banks have turned defensive in the aftermath of the Punjab National Bank fraud.
BSE Sensex index chart pattern
The following comment was made in last week's post on the daily bar chart pattern of Sensex: "Since the 'triangle' has formed after a correction from the Jan 29 top, the likelihood of a downward breakout is higher."
After receiving support from the lower edge of the 'triangle' on Mon. Mar 5, the index broke out below it the next day and touched an intra-day low of 32991 on Wed. Mar 7 - correcting 9.5% from the Jan 29 lifetime high of 36444.
As often happens after a breakout below a consolidation zone, there was a pullback towards the lower edge of the 'triangle'. But the pullback effort was weak.
Formation of a 'reversal day' bar (higher high, lower close) on Fri. Mar 9 has given bears another opportunity to sell. A test of support from the 200 day EMA and the lower boundary of the 'support/resistance zone' seems imminent.
Daily technical indicators are in bearish zones. MACD is falling below its signal line. ROC is moving sideways below its 10 day MA. RSI has bounced up from the edge of its oversold zone. Slow stochastic is inside its oversold zone.
Note that ROC and RSI touched higher bottoms while the index dropped lower on Wed. Mar 7. The positive divergences probably triggered the pullback. There was no divergence confirmation from MACD or Slow stochastic - which may explain the weak pullback.
Bulls can be expected to defend the 200 day EMA strongly, which in turn can lead to some sideways consolidation within the 'support/resistance zone'. Unless FIIs start buying in a big way, the index is likely to fall below its 200 day EMA.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty broke out sharply below the 'symmetrical triangle' pattern within which it was consolidating for 4 weeks. The index closed below its 20 week EMA for the first time in 14 months.
The 50 week EMA is still rising, and the index is trading above it in a bull market. However, a test of support from the 50 week EMA - and a possible breach - seems on the cards.
Weekly technical indicators are looking bearish. MACD is falling below its signal line in bullish zone. ROC is falling rapidly in bearish zone. Slow stochastic is sliding down in bearish zone. RSI is meandering sideways in neutral zone.
The 50 week EMA (at 10000) is looking vulnerable. Bulls can put up a fight to defend it - leading to some sideways consolidation below the 'triangle'.
Nifty's TTM P/E has moved down to 24.97 - but remains well above its long-term average. The breadth indicator NSE TRIN (not shown) is rising towards its oversold zone, and can limit index downside.
Bottomline? Sensex and Nifty charts are undergoing bull market corrections. Downward breakouts below 'symmetrical triangle' patterns can lead to deeper corrections. Several IPOs lined up till March-end will divert liquidity from the secondary market. Use a 'sell on rise' strategy in the near-term.
During Feb '18, FIIs were net sellers of equity worth Rs 186.2 Billion, as per provisional figures. It was their heaviest monthly net selling since Sep '17.
DIIs almost matched them with net buying of equity worth Rs 178.1 Billion - which was their strongest monthly net buying since Sep '17.
India's GDP grew 7.2% in Q3 (Dec '17) against a revised 6.5% growth in Q2 (Sep '17) on the back of a rebound in industrial activity.
Auto sales showed good growth in Feb '18. 2-wheelers, 3-wheelers and Commercial Vehicles showed double-digit growth. In passenger vehicles, Tata Motors and Maruti showed double-digit growth, but M&M, Ford, Hyundai, Toyota showed mid to low single digit growth.
BSE Sensex index chart pattern
For the past 4 weeks, the daily bar chart pattern of Sensex has been consolidating sideways below the 132 points downward 'gap' formed on Feb 5. By touching lower tops and higher bottoms during the consolidation, the index is forming a 'symmetrical triangle' pattern.
Triangles are unreliable but tend to be continuation patterns. Since the 'triangle' has formed after a correction from the Jan 29 top, the likelihood of a downward breakout is higher.
That opens up the possibility of a test of support from the rising 200 day EMA. In case of a less likely upward breakout, the 'gap' is going to provide resistance.
Daily technical indicators are looking bearish. MACD has merged with its falling signal line in bearish zone. ROC and RSI have slipped back into bearish zones. Slow stochastic is in bullish zone, but showing downward momentum.
DII buying has managed to put a temporary floor on the index. However, with a slew of IPOs in the pipeline, liquidity in the secondary market may begin to dry up.
The index is trading above its rising 200 day EMA. The long-term trend remains bullish. In the near-term - at least till Mar 31 '18 - 'sell on rise' may be a more profitable option.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty spent a fourth week below a 33 point downward 'gap' but managed to close above its 20 week and 50 week EMAs in a bull market.
The index appears to be forming a 'symmetrical triangle' pattern from which the likely breakout is downwards. 'Triangle' patterns tend to be unreliable, so it is better to wait for the breakout before taking any buy/sell decision.
In case of an upward breakout, the 'gap' should provide resistance. But an upward breakout seems unlikely - unless FIIs resume buying. Interestingly, they were net buyers on Thu. Mar 1 - ahead of the long weekend.
Weekly technical indicators are looking bearish. MACD is falling below its signal line in bullish zone. ROC is falling below its 10 week MA and looks ready to enter bearish zone. RSI is seeking support from its 50% level. Slow stochastic is moving sideways below its 50% level.
Nifty's TTM P/E has moved down to 25.59 - but remains well above its long-term average. The breadth indicator NSE TRIN (not shown) is oscillating in neutral zone after falling sharply from its oversold zone. Some more sideways consolidation is possible.
Bottomline? Sensex and Nifty charts are undergoing bull market corrections after touching lifetime highs 5 weeks ago. The downward 'gaps' formed on Mon. Feb 5 have acted as resistance zones. Both indices have formed 'symmetrical triangle' patterns from which downward breakouts are likely. Use a 'sell on rise' strategy in the near-term.
WTI Crude Oil chart
The daily bar chart pattern of WTI Crude Oil broke out above the 'symmetrical triangle' pattern within which it was consolidating for 5 weeks. The possibility of such an upward breakout was mentioned in the previous post.
An explosion on a Libyan crude pipeline triggered by armed assailants on Tue. Dec 26 cut Libya's oil production by 100,000 barrels per day. The news may have aided the upward breakout.
Note that volumes during the upward breakout was not significantly higher - a required condition for a technically valid upward breakout. Perhaps a truncated trading week due to Christmas holidays and year-end considerations contributed to the lower volumes.
Oil's price ended the week, month and year at a 2.5 years high of 60.42. All three EMAs are rising, and oil's price is trading well above them in a bull market.
Daily technical indicators are in bullish zones, but showing negative divergences by failing to touch new highs with oil's price. Slow stochastic is looking overbought.
A pullback towards the top of the 'symmetrical triangle' is a possibility. Bulls may use the dip to buy.
On longer term weekly chart (not shown), oil's price closed above its three weekly EMAs in long-term bull territory. Weekly technical indicators are looking overbought and may trigger a pullback towards the 200 day EMA.
Brent Crude Oil chart
The following remark was made in the previous post on the daily bar chart pattern of Brent Crude Oil: "Some more consolidation within the 'rectangle' is likely before an eventual breakout."
The expected upward breakout occurred on Tue. Dec 26. News of an explosion on a Libyan crude oil pipeline may have triggered the breakout, but muted volumes failed to technically validate the breakout.
Oil's price ended the week, month and year at a 2.5 years high of 66.87. Daily technical indicators are looking bullish but showing negative divergences by failing to touch new highs with oil's price. A pullback towards the top of the 'rectangle' is a possibility.
On longer term weekly chart (not shown), oil's price closed above its three weekly EMAs in long-term bull territory. Weekly technical indicators are looking overbought. Slow stochastic is showing negative divergence by failing to touch a new high.
WTI Crude Oil chart
The following comments appeared in the previous post on the daily bar chart pattern of WTI Crude Oil: "Expect some more consolidation before another breakout can occur. Logically, the breakout should be upwards because oil's price is in a bull market. However, it is better to wait for the breakout because a 'triangle' pattern is unreliable."
As expected, oil's price continued to consolidate sideways within a 'symmetrical triangle' pattern in a bull market. The entire pattern has formed above the rising 50 day and 200 day EMAs, so the logical breakout should be upwards. But logic doesn't always work for 'triangle' patterns.
Daily technical indicators are giving conflicting signals, which is often the case during periods of consolidation. MACD and RSI are showing downward momentum in bullish zones. Slow stochastic is showing upward momentum in bearish zone.
Oil's price may consolidate a while longer before the supply/demand balance gets tilted to one side. Which side?
U.S. shale supply, the IEA said in its December Oil Market Report, is set to grow more than OPEC has estimated and this could be the undoing of the production cut that boosted prices this year.
On longer term weekly chart (not shown), oil's price has been struggling to close above its 200 week EMA. Weekly MACD and Slow stochastic are beginning to correct inside their overbought zones. RSI is moving sideways in bullish zone.
Brent Crude Oil chart
The daily bar chart pattern of Brent Crude Oil has been consolidating sideways since the beginning of Nov '17. The earlier 'triangle' pattern has been modified to a 'rectangle' pattern based on the trading pattern of the past two weeks.
(There is nothing unusual in such modifications. A developing pattern often changes shape, which should be incorporated to reflect the change. The important point to note is that a 'triangle' and a 'rectangle' are both sideways consolidation patterns.)
On Mon. Dec 11, oil's price rose sharply to 64.93 due to a crack in a North Sea pipeline that caused a shut down. The next day, oil's price broke out above the 'rectangle' to an intra-day high of 65.83, but closed well inside the 'rectangle' at 63.34 - forming a 'reversal day' (higher high, lower close) bar that triggered a correction below its 20 day EMA.
Daily technical indicators are giving conflicting signals, which often happens during periods of consolidation. MACD is showing downward momentum in bullish zone. RSI is moving sideways in bullish zone. Slow stochastic is showing upward momentum in bearish zone.
Trading on Mon. Dec 18 formed a 'doji' candlestick pattern that indicates indecision among bulls and bears. Some more consolidation within the 'rectangle' is likely before an eventual breakout.
On longer term weekly chart (not shown), oil's price is consolidating sideways just above its 200 week EMA in long-term bull territory. Weekly technical indicators have started to correct overbought conditions.
