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. Meanwhile US indices kept on shooting up. I believe that whole world is experiencing some great changes.

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

NIFTY - Technical views as on closing 11 Jan 2012

Two days back I have updated that it cannot be good to hold short if NIFTY spot manages to stay above 4801 levels.

Next obvious question is about the magnitude of the rise. We are just on the verge of 50 days moving average which is running near 4877-4876. Charting suggests that we will see stiff technical resistance near those levels. Thats the reason I have quoted tomorrow that it may not be easy for NIFTY to move beyond 4880.

From the levels of 4876- two possibilities arises. 

 Possibility 1 (Bullish) : If we manage to stand above 4880 then we can expect rise to be extended towards 4940-4949, which is 100 days moving average and the higher end of gap fill which is indicated in the given chart. In the bullish possibility, Nifty must break 4880 (this condition is to be applied above 4880 only) and then try to hit 4940-4949. We may expect consolidation in those ranges before shooting upwards with great denial for any fresh fall. 

 Possibility 2 (Bearish) : This possibility will arises on the failure of 4880 or you can say on the failure of bulish possibility. We are already trading close to 4880. Charts suggests that to be on safer side one should opt this possibility only when Nifty sustain below 4801, which is nothing but previous breakout point. We may see some consolidation below 4801 and then a fall. Major support will run near 4680 levels which can be a concluded target.

Its still hard to believe the beginning of sharp rise before quarterly result. Let us see. Today is also an important day.

If you want to know more details then mail me at praveen@viecapital.com

Thanks,

Praveen Kumar