Weekly Chart I
Weekly Charts show a bullish breakout from the trading range of 5 weeks between 5350 and 5492. Volumes were not very high . But then, the volumes have been drying up right through the consolidation since May 2009 ! This range breakout gives a target of around 5630. The oscillators are showing strength by moving up again but yet to move above previous highs, thus still in negative divergence.Macd too is in negative divergence but in buy mode since 9th July 2010.
Weekly Chart II
Since the rally is now almost a year and a half old , a thorough checkup would be necessary. The volume chart shows increasing volumes on falls and declining on rises.Overall too the entire rise is on falling volumes. The advance decline line too has been constantly falling showing lower and lower participation of stocks in the rise. These two indicators show that all is not well. Increased volumes and participation of more stocks on further increases is desired.
Meanwhile, the daily charts show bullish patterns giving ambitious targets as shown in the daily line chart below.Targets on candle charts may vary by a few points.
Daily Line Chart
Please note that pattern targets are a probability too.It is important to be aware of supports and resistance all the while to be ready for pullbacks and failed patterns. It is support and resistance levels that lead to pullbacks and throwbacks.
In order to keep our feet firm on the ground some bearish pointers.
- Daily oscillators continue in negative divergence and OBV too has joined in after a long time.This is bearish.
- Trendline on Nifty monthly chart joining tops from October 2009 has resistance at 6517. The same trendline on the sensex has the resistance at 18447 which has already been hit.Sensex made a high of 18475 before retracing to close at 18402.
Supports at 5513-5494-5470-5445 Resistance at 5540-5545-5550-5565.
Happy Trading !!