June 17, 2010


  • Dow jones today broke an important trend line in the hour chart.
  • If the index falls below 10330 bears will become stronger.
  • And bulls will try to defend this support zone.
  • If this triangle break out is not a false one bulls will gain some strength and try to move higher.
UPDATED CHART

  • If the ascending trendline breaks one can go short.
  • The set up is in favour of the bears because of the negative divergence.
  • Have yesterday's high as stop loss.
DOW JONES HOUR CHART
MOVING AVERAGE



FALLING WEDGE

FIBONACCI LEVELS

  • The hour chart trend line has not been violated.
  • One can remain in the long trade as long as it is not violated.
  • The 2nd chart shows the price closing above the 200 day moving average for the 2nd day .
  • The falling wedge break out is working well.
UPDATED CHART

  • Nifty is in uptrend in daily chart.
  • But i feel this will end soon near 5300.
  • The right shoulder of the head and shoulders pattern has started forming.
  • By keeping 5330 as stop loss one can start shorting in small quantities when nifty touches 5280-5300.
  • Nifty has broken out of an inverted head and shoulders pattern.
  • The volume at the time of breaking neckline has seen an increase.
  • The target for this pattern should be above 5300. 
FALLING WEDGE
DAILY CHART
DAILY CHART
DAILY CHART
  • SP 500 ended the day as a doji day the candles stick pattern that tells us that the bulls and bears are not sure about the direction.
  • For the second day the index closed above the 200 day moving average.
  • The charts suggest that the move from 1040 is study without any major retracements.
  • It looks like the falling wedge break out has some more price movement left on the upside.
  • There was an intraday dip due to the hourly negative divergence . But the correction was not up to the levels which was expected because of a prominent negative divergence.
  • They say price discounts everything.
  • The negative divergence may not have shown its effect till now.
  • But one bad news and that becomes the reason for the negative divergence to play out.
  • On the contrary the price movement towards  the upside has been very strong
  • A close above 10460 should make the bulls comfortable and strong.
  • But a break and close below 10320 will favour the bears.
  • And one more important thing  is that if the negative divergence has to play out it should happen within the next 3 to 4 hours. If it does not the divergence will vanish. 

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"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