iCharts Discussions

[anilsutarpune]

Wish you all a happy and profitable new year!!!

Month Ended :-December 2014
Pattern on Monthly Chart:- Bearish Engulfing
First real bearish sign after 10 months of Bull run!
Ok First, Bearish engulfing is not very strong reversal pattern; it is a good reversal pattern. Please see highlighted boxes on the same monthly chart which shows what Nifty had done on previous occasions when had bearish engulfing.
We have to look at the engulfing pattern in the context. We need to look at current red candle first and then look at entire chart.
Let’s look at candle first:- This candle has large red body indicating bears were dominating the month and them of the market was sell on rallies. But this candle also has long lower shadow indicating at lower price demand is coming back and demand is good enough to push price up again and also surprise bears. Indicating bull is alive!
Let’s look at complete chart:- Since Jan 2008 till Feb 14 (that is 62 month, actually 52- minus 12 month of sharp fall) market was locked in range of 4525-6350, range of 1825 points. This range was broken in the month of March 2014. When such ranges are broken simple target is add the box range to top that is 6350+1825=8175. So T1 for this move was 8175. This was achieved without any correction.
Hence there is more likelihood of a correction as there is chart pattern pointing toward it and no serious correction till now. But can the correction start immediately? My personal opinion is –NO. Because bearish engulfment is not a strong reversal pattern and needs to be analysed in context. Typical behaviour of bearish engulfment pattern is to test the highest high or middle (50%) of two candles at least once and if fails then go down. I expect similar behaviour this time. If nifty fails to hold 8500-8630 then we may go down. Normal retracement for this up move from 6350 to 8630 levels 23%-7900, 38% -7575 and 50% could be 7350.
On upside if nifty hold 8630 we can add another 1825 points to 8175 taking nifty to 10000!!!!
So how should we trade? Don’t be too optimistic or pessimistic. Keep booking profit, don’t hold positions too long and ensure tight stop loss till trend is clear.
Risk Advisory :- Invest based on your own analysis and own risk. This forum is only for discussion

[dole]

[dole]

Dear anilsutarpune,
Lovely explaination. Simple & sweet.Thank you for the same.

[anilsutarpune]

Month Ended:-March 2015

Pattern on Monthly Chart:- Multiple Bearish patterns. Bearish Engulfment, completion of Evening Star. Also please note month ended Feb 2015 has nonclassical Hanging Man.
This is second Bearish engulfing pattern in last 5 months. First was on Dec 2014.
The evening star formed (three candle stick pattern) is nonclassical because the middle candle is having some overlap with first green candle but the third candle has closed below 50 % of green candle. Both these patterns are bearish.

Individual candlestick analysis: - This month’s candle has large red body indicating bears were in firm control of the session. Also has small upper shadow indicating price rejection at top(bearish). The lower shadow is longer than upper shadow indicating rejection of lower price as well! But the lower shadow is not big enough to warrant any sharp reversal (or breaching old high), but is pointing toward pullbacks.

Looking at volume:- Volume is increasing and is higher than previous month. But please note volume is above average for last few months. This is sign of distribution happening at the top. This month we have bearish pattern with above average volume indicating Nifty may not see higher high in hurry.

Overall picture:- Overall picture is bearish. Nifty now has back to back bearish signals. After long Bull run Nifty has created two bearish patterns on the chart. But please note both the bearish patterns have lower shadow and are not at the same price level. The current bearish pattern is at higher price level than previous bearish pattern. It is important to note this as it is showing bullish activity at lower or appropriate price. All this points toward a choppy and range bound market.
After bearish engulfment usually 50% of the engulfment is retested before deciding further price move. Hence please watch price action near 8700. Any sign of weakness near this level can confirm down trend. If held for few days , Nifty may trade in 8900-8320 range for month or two.

Risk Advisory :- Invest based on your own analysis and own risk. This forum is only for discussion

[anilsutarpune]

Nifty-Monthly - Candlestick analysis.

Month Ended:-April 2015

Pattern on Monthly Chart:- No Pattern.

Individual candle stick analysis: - This month’s candlestick has sizable body but not very large. Indicating that bears have managed to take control from bulls for this session. This month’s candlestick has long upper shadow indicating serious price rejection at the top. This is significant to note. Also there is no or very small lower shadow indicating lack of buying force.

All the three components makes this candle a bearish candlestick and shadows are pointing out toward bearish strength.

Upper shadow is significant as it is also highlighting failure at 8630 level. Hence 8630 will become next significant level for any trend reversal.

Looking at volume:- Volume is consistent with price. There is no disconnect between the price and volume this month. Hence previous trend(down)is likely to continue.

Overall picture:- overall picture is bearish. Bears have started work in the month of December 2014. Got control in March 2015. In April there is failure at key level 8630. Usually after such failure at key level and long upper shadow, target is most recent lowest low which is 7950. So target for this down move is 7950.

Medium term picture is bearish. Possibility of new top is remote, at least not this quarter. All this analysis is pointing toward inherent and structural weakness in the economy. There is something wrong with economy which fundamental followers can point out.

A close below 7750 will make Nifty bearish for long term. Till such time long term trend is intact. So please don’t discount bulls.

This market is now ‘sell on rallies’. It is better to avoid selling on breakdown as long term trend is still intact.

Risk Advisory :- Invest based on your own analysis and own risk. This forum is only for discussion