DOW JONES (TECHNICAL VIEW AS OF 11 JAN 2012)
Two and half months back, I have quoted that Indian market will remains a bigger under performer compared to US indices. We have seen the expected fall in equity price in India
Dow Jones has almost traveled nearly 1000 points from its November 2011 lows. Right now this index is showing great strength and there is no doubt about that. On daily chart we have some reverse H&S pattern with nick line near 12300. Somehow we kept on trading at these levels from past 7 trading days. It’s true that the target indicated by those reverse H&S pattern is as high as 13200+ levels. Are we going to see that kind of rise? May be yes but we cannot ignore the development on RSI.
Considering reverse H&S pattern and RSI, I feel that we have a breakout point at 12600 levels. If fall has to come then we are on perfect time and perfect levels.
Crossover of 12600 will guide Down Jones towards 13200-13400 levels. I cannot dare to short above 12600 levels.
Why I am not betting for that rise?
It is itself great to see that it is already trading well above 200 days moving average and giving a feeling like Bull Run . Fundamentals are not justifying for rise immediately. With so much of concerns, it’s really hard to believe.
My conclusion is - if should break in just 3-4 trading sessions more. Close below 12200 will be first sign of some profit taking.
In my next articles I will explain the things based on wave theory.
Thanks & Regards,
Praveen Kumar
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