June 18, 2010

  • Dow jones is forming a broadening bottom formation in daily chart.
  • It is a bullish reversal pattern.

  • Dow jones despite the strong up move throughout this week has not able to close above this trend line.
  • If we take a look at the chart it has ended on a sideways note for the last two days.
  • So a close above this resistance line could give some strength to the bulls.



  • S&P 500 has given 2 doji's in a row. But the trend in daily chart is still up.
  • The price is above 200d moving average. And when the 50 day moving average goes below 200 day moving average that crossover is known as death cross.
  • Death cross it seems has to wait for some more time.
  • The daily chart is also showing S&P moving up my making a double bottom. And this pattern should push S&P 500 above 1150.
  • A close below 5251 will be negative for the short term.
  • Below that 5220 will give support

  • Tata steel made a recovery by breaking out of an inverted head and shoulders
  • The levels mentioned earlier has been working in order.
  • Now at 493 the stock got resisted and it is testing 476 again.
  • An up move from here will form another big inverted head and shoulder possibility.
  • But if it does not hold on to 472-476 it may go back to test its previous lows.
  • CLICK HERE TO SEE THE LEVELS FOR TATASTEEL MENTIONED EARLIER
  • Euro made a reversal from the falling wedge.
  • The reversal is mostly due to short covering.
  • And right now trading near 1.24 and will have enough steam to reach 1.26 were it will face stiff resistance again. and may be selling pressure will return
WEEKLY LINE CHART


  • The charts above shows reliance industries multi month trading range.
  • This consolidation has been going for nearly 13 months.
  • So this time it may break out. But i have checked many indicators like stochastic, and williams %R everything seems to be in overbought in daily time frame. 
  • But indicators can remain in overbought status for a long time if the price decides to march ahead.
TATA MOTORS CHANNEL UPDATED
THIS IS HOW THE CHANNEL FORMED IN MAY
  • Tata motors entered into a channel in the middle of november.
  • And the stock gave a good opportunity last month when it came to the bottom of the channel.
  • For those who had taken position near the bottom of the channel the stock has given good returns.

  • CLICK HERE TO SEE THE TATAMOTORS POST IN MAY
  • This is the daily chart of nifty with MACD crossover buy and sell signals.
  • For some one who believes in MACD daily time frame crossovers the last four signals would have given them four great trades.
  • And the current MACD signal which gave a buy from around 4800 is still going strong.
  • The current daily chart up trend which started from 4780 levels had a dip in the middle but see how the MACD did not give a sell.
  • But as we all know all indicators can fail and can give whipsaws it is important to fine tune these signals with moving averages and fibonacci levels.




  • Dow jones is now marching towards the 50% retracement of it fall from 11250 to 9757 
  • Dow had a small dip today after it broke its hourly trend line. And it went down till 10330.
  • 10330 being earlier resistance gave it support as expected. But on seeing the amount of negative divergence i thought that area will not hold. But dow jones took support there 
  • And one more important thing is that this is the third consecutive close above the 200 day moving average which is good news for the bulls.
  • But the 20 day moving average is still below the 200 day moving average which is the last hope for the bears for the short term.
UPDATED CHART


  • Dow has also broken the trend line hour chart.
  • Now the same set up has worked for the bears in DOW jones as well.
  • It is very important to know the next support level which comes at 10330.
  • An hourly close below 10330 and the situation will become bad for the bulls.

  • If dow jones break 10330 as discussed in the hour chart this can bring the index down to 10250
  • And the hour chart will favour the bears then.
  • We already had a trend line break in the hourly chart.
  • This head and shoulders if works out correctly will be a setback for the bulls

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