ANS Research Desk ARHAM Financial Centre Harihar Chowk, RAJKOT (Guj) Speak to: 0281 6699401 Drop a line to: research@anspl.net Daily Report For, 26-30 th Dec 2011 Technical Chart Book Weekly Price Outlooks of Various Indices Technical Analyst Bhaskar Radadiya research@anspl.net +91 281 6699401
1. India (S&P NIFTY Index) S&P NIFTY Index Daily Price Movements S&P NIFTY, the barometer of Indian Stock market by volume has been entered into the threats of Bearish formation. Last week the Index has closed at around 4715 Level which was 100 point below from the Confidence Level of 4815 Level. The level of 4815 level became Confidence Level as it indicates 50% Retraced Percentage of Previous Bear Series. In last trading session the index has been reversed from 38.20% Level, from 4750 by Value which was an important sign of Bearish influence. The level of 4785 in Future contracts also witnessed a quantity of fight between Bulls and Bears as the level was highly penetrate during the previous fall of series. So technically we have a Powerful Resistance at 4750 in Index & 4785 in Future contract and have to wait for further infiltrate the price and cross the barrier. Technical Apparatus: DMI indicator s constituents passing from some dilemma right now because both, Histogram and Lines showing different kind of affairs in price. Histograms showing some reversal from 0 base level while DI- indicates some further continuations in Bearish Wave above the DI+. But it s just born of Narrow band due to last day s Selling Pressure. So due to this reason we have to watch another indicator to grasp the movements of Price. Well, DMI showing some sign of worry and little bit of confusion due to internal concerns let see the Elliot Oscillator. If we closely monitor the recent movements of Histograms, we could found that there are two Bottoms below the base line which intersect and also suggest support at 4640 Level. And if we look at the Index s recent development, we found a Pinocchio Bar at the Bottom, below the Lower Low s Trendline. The curve of Histogram going to complete which is almost 60% completed yet so we have some hope also but not confidence!!! In progress Formation: We have some worry about the threats of Head & Shoulder formation which is almost completed but still waiting for Bulls attempt to cross the line of 4815 Level, 50% Retraced Percentage Level. Index trading at Right Shoulder which does almost over but still possibility of Multiple Shoulder exist. Hence, the Bulls must cross the hurdle of 4815 and 4880 Level to lessen the effects of H&S formation Outlook/Projections: The current state of affairs indicates neither Accumulation nor distribution zone in the market. The picture is still gloomy and waiting for a good trigger. We expect that Index might hang in between 4665-4815 Series for Initial days of Week and then decide the Fresh Move either side. As we know that Technical Analysis is the science of Price movements and no specific Rules hence we always have to work with IF THEN ELSE conditions. Now what if 4665 break down? In that case the Series of 4530 further open for second bottom and in above case of 4815, 4880 will infiltrate by Bulls easily
1. India (S&P CNX 500) S&P CNX 500 presently under effects of Bearish Grip which are clearly seen in above chart where various whipsaws occurred during the recent phase of the Rally. Before few days back the Index has lost the strength from 3835 Level which was strongest Bottom Base level at that time. After that divergence activities the Index again entered into the Lower Lows kind of juggling. Presently the Index is full of activity with searching the Resistance-Support game for higher breakout which looks still gloomy. Recently when Index close around the 3660 Level, which was the earlier Support for Bulls, has been became a poise level for the market. Technical Apparatus: Two Technical Indicators are highly engage to emerge specific result for projection of price in case of the Index. RSI, relative strength index, already kept inside the Descending Triangular Formation with base line at 25 Reading and lower Slope as a Descending Slope for the RSI. The next expected level of RSI would be at around 48 Reading which will be a Hurdle Reading as it encounter the Descending Slope for the Index. Hence, till 48 Reading we have no miracle in the index but it s just a part of the formation. But if RSI cross the 48 Reading and No Further Back then might be it is a case of Failure of Formation and outcome might positive for the Index for 3835 Level further. Now in case of MACD, our second active Indicator showing Double Bottom shape in MACD line and also point out towards the conversion between MACD line and Signal. The Conversion is a small and no impressive effect until and unless it crosses the Median Line of Equidistance Line in above chart. It s compulsory for Bulls to tweak the Index so the Threat of Head & Shoulders contour becomes dead. And double bottom shape of MACD Line might boost the reading so that the Index tests the first Hurdle Line at 3835 Level. In progress Formation: As of now there is no specific formation in S&P CNX 500 Index but a Sliding Head & Shoulder formation seen at the tail of recent rally. If we consider the current cloudy pattern as a specific formation than the recent low of 3530 would be more effective as a support band. RSI showing some probabilities of Bearish Continuation while MACD indicating towards H&S Behavior but chances of Failure too. Hence in such quandary we have to wait for 3835 higher level for Bearish Failure and 3530 as a Bullish Failure. Outlook/Projections: In case of 90/95% completion of any formation, it is very hard to predict the future Wave because price always nearer towards the Result and all eyes minting for a Result. Real powers always come into picture after Breakout and Breakout always is either side. If 3660 Close level sustain then 3835 would be visible and we should be optimistic for the Index but in case of breakdown, 3530 will be next level where Bears are waiting for the battle.
2. Asia (Hang Seng Index) HANG SENG, highly volatile and low range Index by Price also dominant Asian Markets as all eyes watching Hang Seng before Indian Opening Bell. As like Indian indices, Hang Seng also looking in consolidation Zone which is waiting for the prompt to accompanied the incomplete rally. We have used the word Incomplete because later we will see the formation and its impact on the index. Little support and resistance also active among traders which is also part of the formation behavior. The Index, as we said earlier, entered into the side way zone and hence no major volatility expected exclusive some move for resistance breakup Technical Apparatus: In case of Hang Seng we have select two indicators like MACD and Detrended Price Oscillator. Both indicator and oscillator have specific impact on the Index. We have witnessed some silent but important movements inside MACD and it looks like in search for an opportunity for Breakout. MACD had converged the MACD Signal line two times minimum short of time frame which indicates fight for existence. Such kind of behavior of MACD indicates short term moving averages ZigZag movements. But we have also a positive cue and that s the Double Bottom kind of structure at MACD Line which also indicate that if it sustain then we have a good rally towards 19250 Level. The Detrended Price Oscillator screening some Resistance cum Overbought area around 18800 Level and also facing some hurdle at Topmost 580 Reading. As detrended working as a Cycle and not a trend, if the Hurdle became a failure of Cycle Continuation then we might have some worry for continuation. But the Detrended also kept under the shape of Ascending Formation and this is the only one Positive cue for the Index. In progress Formation: Two developments inside the Indicator and Oscillator pointing towards the Price formation called Big W Pattern. We are not sure about the Pattern s Confidence but as some specific shapes inside Detrended and MACD, we have to think for Projection. If we look at the current incomplete Pattern, we could justify from the Double Bottom at MACD and Ascending Triangular at Detrended suggesting specific Price movements towards North. And if Detrended work as per drawn line in above chart then the Projection towards north surely confident. Outlook/Projections: As we have a storied about the Possibilities of Big W, the Index has a resistance at 19200 Level. Detrended Cycle indicates pressure on price and hence we foresee the level at 17850 Level at downside. The Projection of Detrended s movements showing opportunity for price for further advance after back from 17850 and then clear Up wave for the Upper cutting Edge of Big W formation s at 20200 Level. So we have a series like 17600-17850- 18600-19200-20200 for the prospect
2. Asia (Nikkei 225 Index) NIKKEI 225, the Leading Index of Japanese stock market smashing down since the Natural disasters in the country. Since then the Index is making new lows and also loosing confidence of Foreign Investors due to some Debt concern also. The Index is trading under Bearish Effect of Rounded Formation but it will take some more time to mature the pattern or even second bottom at 7070 Remarkable Level. Presently the Index trading under the Reverse Megaphone kind of pattern, we can also call as Falling Wedge but we can t because Falling Wedge developed always in Uptrend. Nikkei 225 Index also witness about some marginal negative effects at current level which denoted by DMI but Ultimate Oscillator showing some prospect sign. Technical Apparatus: Ultimate Oscillator which is the combination of Short-Medium-Long Term averages showing penetration at Reading 50 Level and also facing some resistance power to sustain above the 50 Level. Higher Lows also witnessed in Ultimate Oscillator which a Good sign for advancement of the Index. DMI Directional Movement Indicators showing continuation of Bearish sign and still under Pressure. Recent twist between constituents like DI-, DI+ & ADX line indicates complex and absence of confidence behavior by traders. So from DMI side we do not have any idea about the price movements and further advancement or encroachments. In progress Formation: From Technical development side there is no specific Pattern or formation but just a rough idea about the Falling Wedge kind of formation and some opportunity from Ultimate Oscillator side. So we have to believe on the price development only and if there is any advancement in oscillator then some sign expected for breakout level above 8470 and 8610 Level. Outlook/Projections: The picture of Index by price looks dim and Breakout for further advancement also looks in obscure. Well, breakout above 8470 level would be visible towards 8560-8730 Series. While on downside level 8255 recent low also expected if Bearish Continuation existing. Presently the Oscillator trading at 44.76 levels as per the recent close which near about the Centre level of 50 marks. While in case of fall back, if Oscillator sustain the Higher-Low Line at 35 Level then also the Index has some chances for further higher side until and unless it further fall back below 35 Level.
2. Asia (Shanghai Composite Index) Shanghai Composite Index, trading at the oversold zone, indicates by RSI indicator and also in search for Final Bottom for Momentum Trading Zone. Presently all Asian Indices has beaten heavily and facing foreign funds selling/redemption pressure. China s leading indicator, Shanghai Composite index also trading at lower level but still lack of confidence for Bottom hunting or final Bottom. The level of 2200 Level is 110 points below from previous Bottom Level and retraced more than 100% from previous top of 3185 level. In above chart we found some cues which might helpful for the Bulls for some optimism about the Shanghai Index but it are enough??? Technical Apparatus: On DMI side, constituents like DI- & ADX line trading at highest Level and DI+ line trading at the lowest space around the base line. After huge gap between Negative lines (DI- & ADX) and Positive line (DI+), Negative lines looks on sideway track and it s an opportunity for Bulls for advancements. The same maturity has been witnessed in DMI histograms which also suggest recovery from the least trough level. In that case we have some projection for price and if history repeats itself then we sure about the advance rally for next 200 points at least. Composite. At the moment RSI trading the lowest value of 33.02 level which is the nearer to 30 remarkable zone but it is not compulsory that index always reverse from the remarkable oversold zone. More weaknesses might happen if more selling pressure diminishes the Bullish or early reversal sentiments. In progress Formation: The index does not have any specific Technical pattern or formation excluding Retracement and Reversal Principles. In above chart we marked two circles on intermediate peak which denoting reversal till 38.20% retraced percentage level from each trough. Now we have highly oversold RSI and Mature DMIs suggesting Reversal and hence we believe that if reversal successful than the Index reverse till 2300 level. Outlook/Projections: As per Retracement & Reversal Principles, the Index has a good chance for 2300 level and more. According to Oversold RSI at 33 Level and Mature epoch of DMI constituents, if Index reverse from the current level than 2300 level would be visible and above that 2345 Level which are 38.20% & 50.00% Retraced Percentages Respectively. But in case of further downside pressure, index might test 2140 Level further. RSI which measure the index s strength or weaknesses on specific timeframe designates highly oversold situation for the Shanghai
3. USA (Dow Jones Industrial Average) Dow Jones Industrial Average, followed by the World of Financial market. At present the Index trading at the cutting edge of Ascending formation about which we will discuss later on. Broadly the Index trading with highly supported area of 200DTMA line which has been penetrate several time in short of time period. So now it become highly activated level for traders. Previous rally in average was due to smart data from various Economical components but it will continue or not is still a question of predicament Let see and catch price movements with help of various tools, indicator and price behavior from above chart. Technical Apparatus: Awesome indicator which comprise with 20 and 50 Simple Day moving average showing some reversal effects in Index. It s just like 20DEMA going to advance above 50DEMA data and it s positive sign. After Lower Slope from peak now Oscillator has emerged out for positive movement s and this movement has been kept by small Green Histograms in above chart. Such kind of behavior from the Histogram showing Reversal effectiveness for the Index. Hence from Indicator and Oscillator s of view, the Index has some good chance for reversal but up to how and at which state that we will see in following session. In progress Formation: In short term we have found an Ascending Triangular Formation which a part of Long Term Inverse Head & Shoulder s Right Shoulder or a tail. Presently the Index is trading 440 points above the 200DTMA line and at a Horizontal Cutting Edge of Triangle. So after penetrating the Cutting Edge, the Index might test 12500 Remarkable Level but further advancement above 12500 still case of confusion. Outlook/Projections: As we discussed in above para, the Index has some chance for 12500 Neckline level which supported by Awesome Oscillator and DMI indicator. While on downside, first Bearish Level that has to absorb is 11850 Level, at 200DTMA. Recently a Positive Crossover has been seen between 20 & 200DTMA at the Level of 11900 Level ages respectively. But in case of further downside pressure, index might test 2140 Level further. If further advancements and rally continue then the price might further rallied towards the Neckline of Inverse Head & Shoulder formation. The same behavior has been witnessed from the DMI side where DI+ line just crossed the DI- and DI- line also started its journey towards south. Since last panic in the Index, lots of zigzag and twist kind of behavior witnessed on daily basis which enforced traders for highly speculative game.
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