August 27, 2010

  • S&P 500 will hit the resistance line in 4 hour chart if it continues today's trend which is up.
  • Index will struggle to cross 1065-1070 levels. If this level is crossed successfully we can see good momentum towards the upside
  • Dow Jones futures is approaching 10100 level. Index got resisted at this area in the recent past.
  • A big move on the upside will be possible on a good breakout of this level.
  • If the index gets resisted at this level. It will trade in a range as discussed below
  • Dow Jones futures is trading in a range of 185 points. with 10101 being the resistance and 9916 the recent low will be the support.
  • Break of 10101 can give good upside momentum for the index. Break of 9916 convincingly can take the index up to 9830 levels.
  • Nifty futures is testing 5456 support line. Break down from this area can take it down to 5420 levels

  • Nifty futures have been trading in a range of 5456 and 5487 since yesterday.
  • Bulls tried in vain to break 5487 many times.
  • Now the index is moving towards the lower end of the range. 
  • A clear direction may emerge only on a strong breakout from this range.

  • Negative divergence can be clearly seen in nifty's daily chart in MACD and RSI.
  • See how the channel of nifty is going up and the channel in RSI going sideways with a negative bias.
  • One may get a good clue if the bottom support line of RSI breaks early. That may be the start of nifty's big correction. 
  • For negative divergence price confirmation is very important in this case nifty may move upwards again before correcting.
  • Nifty has closed above 20 SMA and above 5 day low ema. Price is also trading within the boundaries of the channel discussed early.
  • Thank you S.Kumar for asking about the negative divergence. I spotted the Channel in RSI because of that.

  • 1050 gave good support for S&P 500 on closing basis. That has been violated now. 
  • Price is trading below 200, 50 and 20 DMA.
  • 20 DMA is approaching the 50 DMA. So we can expect a big  move in either direction.
  • If the negative cross happens 20 DMA crossing 50 DMA that will be bad news for the bulls.
  • On the contrary this can also be a fast raise set too.


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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