June 11, 2010


  • The rising wedge seems to be on track.
  • breaking 10100 will trigger a large correction.
  • The raising wedge in Dow has broken its lower trend line.
  • Now it is accompanied by a small triangle.
  • This triangle may give an early indication to which side this is going to go.
  • The triangle can give a wrong direction as well.
  • Trade safely.
  • Russell 2000 like dow jones has the hidden negative divergence.
  • And it is more prominent in russell 2000 index.
  • It seems everything is going to break down at the same time when it happens

  • Dow jones has formed a rising wedge in 15 minutes chart
  • break down from this pattern can bring the index below 10000

  • Dow jones showing hidden negative divergence in its hour chart
  • I have to say this one need price confirmation for it to show its effect.
  • Hidden negative divergence occur when the oscilator makes new high. But the price does not make a new one.

  • Dow jones 5 minutes chart shown here with ASCENDING BROADENING WEDGE.
  • Usually a bearish pattern
  • We are seeing a fall today because of the negative divergence in MACD.
  • MY personal opinion is that dow will stay inside the wedge for some more time before breaking down.

  • SP 500 yesterday has closed above its 23.6% fibonacci level in daily chart.
  • The next target for this index is the 38.2% level. This comes around 1110.
  • Any move towards 50% retracement is possible only on a firm trade above the 38.2% level which can act as a resistance for SP 500.
DAILY CHART
WEEKLY CHART
DAILY CHART

  • As you can see from the above charts today was a bullish day.
  • The first chart shows the price reversing from a falling wedge pattern. Targeting 10400 and above
  • The second is the weekly chart. If this week closes above 10200 Then the weekly chart will also become slightly bullish.
  • But the third chart shows were bears might come in. The price has managed to close above the 10 day SMA. But stopped short of the 20 day SMA. 
  • And remember the price the 10 day moving average, the 20 day moving average everything is below the 200 day moving average.
  • So this reaction might be a retracement towards the 200 day moving average before falling deep.


DAILY CHART
DAILY CHART
WEEKLY CHART

  • Daily chart of SP 500 shows the price breaking the channel and closing outside of it.
  • Has good resistance from 1080 to 1100
  • Weekly chart shows the classic resistance turning into support.
  • in setember 2009 sp 500 met a resistance. Now those points has become supports.
  • In weekly the price has deviated away from 20 SMA. So the price may want to go back to retest the 20 SMA.
  • In weekly chart A reversal from the current level to Were 20 sma stands will become another head and shoulders.
  • The 2nd daily chart shows the 10 , 20 and 200 SMA
  • The index has closed above the 10 DAY MOVING AVERAGE. But has stopped just below 20 SMA.







  • Nifty 5 minutes chart shows the range of 5105 to 5138.
  • If 5105 is held we might see a rally towards the end of the day.
  • Nifty is struggling to cross 5138.
  • If it stays here for more than hour with out crossing it the index may come down.
  • If it clears 5138 next target for nifty is 5170-5180

  • TATA STEEL breaks out of an inverted head and shoulders in hourly chart
  • But the road ahead is not going to be easy.
  • The stock has to cross multiple resistances in hourly chart.
  • 477, 485, 492 and then the double top at 503. Double top can be seen in line chart.
  • So a trader can make use of these levels. For medium term the stock is still in down trend. The daily chart shows the stock below its 200, 20 and 10 day sma. So the stock should show some more bullishness for a buy and hold type of trade.

  • Yesterday we had two formations 
  • The head and shoulders and the triangle.
  • The triangle won the match or i should say the bulls won it.
  • The next resistance comes at 5138.
DAILY CHART
DAILY CHART

DAILY CHART

HOURLY CHART


  • The first chart shows a triangle in the making.
  • The pattern is not fully completed yet. The pattern can give false break out so think about your stop losses before thinking about your targets.
  • The second chart is an inverted head and shoulders pattern with neckline at 5135 for today. 
  • The next chart shows the moving averages.
  • Nifty has managed to close above 10,20 and most importantly above its 200 day moving average.
  • But the 20 day moving average is still stuck below the 200 moving average a very bearish sign.
  • The next chart shows the gaps in HOURLY chart. The gaps created by last 4 days of trading action has been filled . The only gap that's yet to be filled is the gap that's created around the 4800 levels.
  • Dow jones gave a gap up today.
  • After that it was trading in a range.
  • Now the range has broken on the upside.
  • If it closes above 10150 the bullishness can remain 



  • SP 500 has been trading in this channel for may weeks
  • And today after many weeks trying to come out of the channel.
  • Will the bears come back and knock its head back in to the channel?
  • Or is it a reversal we will know soon

Disclaimer

All the contents of niftychartsandpatterns are for educational purposes only and are not Investment Advice or recommendations offered to any person(s) with respect to the purchase or sale of the stocks / futures. Niftychartsandpatterns shall not be held responsible for the actions of individuals, parties, or corporations taken in response to the ideas, thoughts, concepts or information presented in this blog. Hence all the visitors are requested to apply their prudence and consult their financial or investment adviser before acting on any of the Ideas in this blog.

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My Favourite Quote

"All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis."
—Jesse Livermore