June 15, 2011

  • Hour chart of SPY with MACD showing positive divergence.
  • Divergence has been there for quite sometime now, But price is not showing any major effects.
  • May be one more round of selling is left before the big reversal take place.
  • Dow Jones hour chart with 100 Hour moving average.
  • Price has been trending down below this moving average since may with just one failed attempt to change the trend.
  • Yesterdays up move barely came close to this moving average and already futures hinting a gap down opening. So price should close and sustain above this moving average for changing the short term trend.
  • Nifty spot hour with the broken triangle.
  • Price is getting resisted at the above mentioned line.
  • Bulls should try to stay above this line for a smooth up move to happen
  • Staying below this line will favor bears to push price down further.
  • First chart is for bulls. If the trend line starts from 5892 gets broken and price closes above it bulls may be able to target 5600 level.
  • And that is the very thing bears does not want to happen. Because the second chart shows a possible descending channel for bears. The trend line break discussed in the first chart will make the channel invalid. and things may turn in favor of bulls.
  • For bears the support line shown inside the channel should break. which can accelerate the correction.


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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