Sunday, January 30, 2011

Medium Term Analysis

Medium Term

This corresponds to the time frame of three to six months .

Moving Averages :

The medium term moving averages of 20-50dma are bearishly aligned telling the story for the medium term.

Indicators :

The Weekly charts are seeing the onset of weakness with no signs of Reversal ,indicating that a Weekly bounce is still some distance away. 


The Descending Traingle pattern of a height apprx. 575 points seems to have broken below 5750 levels .It may target near 5200 levels in Medium term which also will be approx. medium term Trendline support area.

FIBO. chart:

This Fibo. chart corresponds to the rise from 4675 level to the top .It indicates Important levels of Supports and Resistances .

Below 5500 level the Support comes at apprx 5300 and 5050 levels in Medium term. The Resistances are near 5700 and 5950 levels keeping 5500 levels as the midpoint.

Volume Profile:

The Volume Profile  shows the Highest Volume node at apprx. 17,500 levels of the Sensex which will correspond to apprx. 5200+ levels of Nifty. The next conflict between Bears and Bulls can be expected near this level .

EW Probability:

The EW count since 4675 shows the completion of the five waves and its a-b-c correction (with a=c ,650pts each).This move since 4675 may be the last wave 'c' of the larger 'B' wave of the 4th in the long term chart.

The a-b-c correction of the upmove since 4675 level may be part of the larger correction in the long term chart corresponding to wave 'C'  of the 4th ,they may be wave 1 , 2 and now in wave 3 of the larger wave 'C' down.

So looks like more pain in the Medium Term , and taking a holistic view of the Medium term ,a level of 5200 can be the next important level (may be the 4th wave of the larger 'C' where some upmove can be expected.). Also any upmove may be capped below 5700 .

See the Long Term EW count here :

Markets have habit of giving extreme reactions during any significant correction or a upmove.One can look to trade the opportunity for large gains when such an event happens ,looks like one is in store for the near future .Plan accordingly.


abhishek said...

Great analysis R V.

AAR VEE said...

Thanks abhishek

speculator84 said...

decending triangle 'false' breakout?
maybe. now wouldnt that be fun!

every analyst it bearish.
every technical indicator, trendlines, or macd's or rsi or whatever is ur favourit poison, is bearish.
every blue channel joker during 9-4 is bearish.
do you know 'anyone' who is not bearish?

Nifty may go to 5400, but she is poised for a move to 6300.

AAR VEE said...

Hi speculator84

Oh and I thought that majority are bullish like u said ,Poised to move above 6300.
To me it looks like a distribution phase where costly goods are being distributed to be bought back again after people get sick of them.

Dont take any poison u see ,trade the screen and ur method ,strong conviction is good but execution should keep the high probability of it going wrong so the s/l and points of invalidation.

Nice to see that u riding a bull in this circus ,where jokers are bearish.

All the Best.Trade safe

KRG said...

Hi : On the Sensex graph posted above, the "1" & "3" both donot look impulsive enough... The only impulse I see in the charts is on the latest down move... which could be some"c"...

I think these are good levels to bet on upside.. the risk reward is good.. and many valuations looking much better..


AAR VEE said...


Ya u must always have ur own convictions and methods.

Better and worse are relative terms which time will tell