July 7, 2011

  • Negative divergence was updated yesterday in the below chart.
  • Today it showed its effect. if today's GAP does not fade we will see an Island reversal pattern
  • Price is starting to show negative divergence in smaller time frame charts
  • But price continue to make new high's which is the problem for bears.
  • Price was closer to the cloud yesterday But the hope of a correction vanished with today's GAP
  • If Negative divergence plays out today's GAP may get faded partially which will give a negative daily candle.
  • Price fell below 1343 and a correction followed as discussed below.
  • ES breakout of a broadening pattern.
  • But hour charts are developing negative divergence.
  • So price should stay above the Mega Phone for the breakout to sustain.
  • Price falling below 1343.50 can give sharp correction.
  • Nifty closes exactly at the trend line for the 3rd time.
  • If history is going to be repeated it self we will see bearish days from here.
  • If price sustains above the resistance line we move higher towards 5800.
  • Nifty line chart shows a breakout above the broadening formation.
  • Now this breakout should sustain and follow up buying should take nifty above the Blue dotted resistance line.
  • If it fails to cross the resistance line and retraces into the broadening formation it will be trouble for the bulls.
  • So Bulls need a close above the resistance line.
  • Bears need to push price back into the broadening pattern.
  • Bank Nifty got resisted at 200 DMA.
  • 2nd chart shows price getting resisted at a trend line. Nifty is also getting resisted at a similar trend line. Any up move will be possible only if Bank Nifty and Nifty stays above this TREND LINE.
  • SPX 30 Minutes chart with ichimoku cloud.
  • Price is approaching the cloud.
  • Price in all likelihood will make another up move after hitting the cloud.


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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