December 21, 2010

  • Dow Jones breaks above the resistance zone.
  • Yesterday's correction got support from the cloud.
  • Sustaining above 11520 levels can push price to 11550 and above.
  • Falling below 11500 again will be negative
  • The down trend line in daily chart looks strong.
  • Last correction of EURUSD Founds support near 78.6% Fibonacci levels. If this level gives support again we may see the resistance line getting broken.
  • Break below 78.6% level can bring EURUSD to 1.26 levels.

  • ES Hour chart is showing support around 1240 levels.
  • Positional longs are safe if price continues to trade above 1240 levels.
  • Four hour time frame is showing negative divergence with MACD indicator. But price confirmation is necessary for trading based on divergence. If price breaks out above 1252 Divergence may disappear. If price gets resisted around 1252 and gives a correction we may see the effects of negative divergence.

  • Nifty Futures trading near support and resistance lines.
  • Break above resistance line should trade above 6015 convincingly. If it does not sustain above 6015 breakout may fail.
  • Break below support line will favor bears.
  • Breaking below 20 SMA will be negative. Sustaining above 20 SMA can give an up move.
  • Nifty is hanging around the 38.2% Fib level for some time now. A range expansion to take out 50% or 23.6% can give good movement. But nifty had trouble in closing above 50% last time too. Nifty did trade above 50% Fib level but never made a convincing close above that level.
  • So bulls need a daily close above 50% Fib level. Bears would like to see 23.6% level gets broken.
  • Dow jones hour chart is showing resistance zone between 11500 - 11518. 
  • The ichimoku cloud in hour chart is acting as support for now.
  • Hour line chart is showing a consolidation pattern that can give direction soon.
  • Daily chart shows 11444 as the important level above which the positional bulls are strong. Closing below this level can trouble the positional longs. 


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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