It was a bullish week with a higher high higher low and a close above the previous week's close. Volumes were average. The weekly oscillators though are not really rosy enough to be all out bullish .Macd is still in sell mode and negative divergences in rsi14 and stochastics persist. Recovery of more than 80 % of fall from 5182 to 4538 is encouraging for further upsides.
A bullish engulfing candle seen on daily charts which is more clearly visible on the sensex chart.
Sensex Daily Chart
The bullish engulfing candle, which, though appears bullish could be a signal that the trend is about to end as the last of the herd may be buying from the smart traders who are selling. "A big bullish Engulfing pattern observed at the top of a trend usually represents the last gasp of the trend."
Since we have bearish indications like break of the uptrendline of the rise, breakdown from the recent rising wedge shown in red and the rising wedge which i have been showing on line charts, it would be wise to wait for tomorrow's action and a close above previous high of 5182, which would confirm whether it is the last gasp or a fresh breath of air.
The daily oscillators too have the negative divergences intact . Macd is in buy mode and stochastics has started correcting the overbought condition.
Caution on longs is advisable till crossing of previous high of 5182 which is most clearly understandable looking at the daily line chart.
Daily Line Chart
Happy Trading !!