Sensex consolidates between 9000 and 9500

Sensex picked up the bullish trend when the 20 day WMA crossed over the 50 day WMA from below at 9483 on 19 Dec 2008, the day when Sensex closed at 10099.91. That was the second consecutive close above the dream 10000 mark following the previous day.

For fundamental reasons (Satyam stock fiasco) the market lost a record 750 points in one single day on 7 Jan 2009, when Sensex closed at 9586.88. Thereafter sensex is hovering above 9000 mark and consolidating towards 9500, the point where strong support offered by the 50 day WMA is available.

The 20 day WMA seen pointing down to cross the 50 day WMA from above, which is a bearish note. But the prices are seen moving towards the 50 day WMA signalling a strong support prevailing at current levels. As sensex finding support at current levels, it would be wise to consolidate long positions to reap the benefit of sensex moving towards the dream 10000 mark again.

Technically speaking, with Sensex consolidating between 9000 and 9500, the earlier forecast of bullish trend for 2009 still stands valid.

Sensex turns bullish for 2009

Sensex has seen a strong uptrend in the past one week and closed consistently above 10000 points in the last two trading sessions. The following developments confirm a bullish trend for Sensex in the short term:

• Strong close above 10000 points
• 20 days Weighted moving average (WMA) cutting the 50 days WMA from below (Refer Circle-3 in the image above)
• Triangular formation break-out at top (Refer Circle-2 in yellow in the image above)

Now lets measure the momentum of this bullish move. In other words what is the potential upswing that one can expect out of this bullish trend set to take off in the short term.

The triangulare formation holds the key. In technical parlence, the points forming the triangle are measured to calculate the potential movement from the point of break out. In this case the triangle formation can be considered to have formed with 11800 on top (Refer Circle-1 in blue) and 7800 at the bottom. Therefor the potential upside move is 4000 points from the point of break out. Roughly 9200 being the point of breakout (Circle-2) and the break out is on the top side, the market has the potential to move 4000 points from 9200 points. That fixes a target of 13200 points for Sensex in the near term (about 1 to 3 months from the date of break out).

While 13200 is only a target for the potential upswing, it is advised to book profit at every high touched by Sensex from the current position until it is a confirmed trend reversal with strong indicators for a prolonged bull phase above 14000 points.

NSE Nifty Daily Technical Analysis update

NSE Nifty Moving Averages - updated daily


This is an end of day chart of NSE Nifty moving averages updated on a daily basis with values as of previous trading day. The daily price movement of nifty is overlaid with 20 days and 50 days Weighted Moving Average (WMA).

How to interpret:

When the moving average of shorter term cuts the moving average of longer term from below, it indicates the start of a bull phase. Similarly when the shorter term moving average cuts the longer term moving average from above, it denotes the start of a bear phase.

Sensex Daily Technical Analysis update

BSE Sensex Moving Averages - updated daily


This is an end of day chart of BSE Sensex moving averages updated on a daily basis with values as of previous trading day. The daily price movement of Sensex is overlaid with 20 days and 50 days Weighted Moving Average (WMA).

How to interpret:

When the moving average of shorter term cuts the moving average of longer term from below, it indicates the start of a bull phase. Similarly when the shorter term moving average cuts the longer term moving average from above, it denotes the start of a bear phase.

Sensex outlook weak for next week

The Sensex successfully broken the resistance at 14000 in the last week but could not hold above the next resistance at 15000. Sensex closed below 15000 in the last two sessions of the week and settled at 14274.94.

Reversal below 14000 would warn of another test of primary support at 12500, while recovery above 15000 would signal that the primary down-trend is weakening. Failure of support at 12500 would warn of another primary down-swing.

In these circumstances, the over bought formation on the simple daily stochastic assures another sharp fall during the next week to test the support at 12500. This validates our previous trend studies to hold good as the market movements are guided through the downward channel.

Sensex Targets 12000 in a downward channel

Sensex moves in a downward channel targeting the support at 12000. The middle line of the channel acts as a strong resistance around 14000. This downward movement is in line with our earlier post forecasting the bearish trend for July 2008. In the previous post the target was fixed at 12245 for the ongoing bearish trend. Now it is not too far to reach as the market loses steam day by day. Market outlook for Sensex is very weak and it is expected to test support at 12000 within few trading sessions from now.

Sensex outlook bearish for short term

Sensex losing nearly 1000 points in the last two trading sessions on 27th and 30th June 2008 has confirmed a bearish market outlook in the short term. Market closed below 15000 at 14889.25 for the first time since March 2008 on 10 June 2008. This is a triangle break out at the bottom side witnessing strong bearish trend thereafter.

The triangle formed on the daily chart has the top declining line touching at 18683.16 (04 Feb 08), 17600.12 (02 May 08) and 17434.94 (16 May 08). The rising bottom of the triangle touched at 14809.49 (17 Mar 08) and 15514.79 (04 Jun 08). The triangle break out occoured on 09 Jun 2008 when the market opened on the lower side with a gap of 450 points from the previous day's close of 15572.18. The break out point of the triangle is at 15560, while the market opened on 09 Jun 2008 at 15115.97 and closed at 15066.10. This break out is again confirmed to be strong when the market tried to push above the bottom line of the triangle at 15696.90 and failed on 17 Jun 2008. The bottom line of the triangle as shown in the image here would serve as a strong resistance before the market turns bullish as the sensex value is well below this line now.

Sensex forecast for July 2008 revolves around the above formation on the daily chart. If you go by the techical analysis rule, the triangle break out has the potential of moving the market along the direction of break out to the extent of tallest portion of the triangle, from the point of break out. In this case the tallest portion of the triangle is between 18124 (top) and 14809 (bottom) having a difference of 3315 points. Therefore the market is expected to move 3315 points downwards from the point of break out of 15560, setting a target of 12245 at the bottom side for the short term range during July 2008.

First forecast on Trendcues.com turns success

In our first forecast posted on 4th June, the fall of market was clearly indicated to test support at 14750, when the market was at 15,962.56 as of close of Friday 2nd June 2008. Sensex duly touched the lowest level of 14645.31 on 10th June 2008, before retracing to slightly higher levels later.

This first forecast posted on Trendcues.com itself has striked success. The blog writer at Trendcues.com has a strong market tracking background ever since 1991. The writer has a very high success rate to his credit in forecasting stocks, commodities and forex market trends. However his forecasts are being published through this blog for the first time now. Trendcues.com takes pleasure in sharing this success with all its visitors.

The earlier chart studies and forecasts made by the writer would be soon made available to the readers of this blog for reference and study purposes.

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