Monday, September 27, 2010

Trend up still intact! But Risk Management crucial…

Sensex continues to behave in a predictable fashion. We mentioned couple of weeks back itself that we expect Sensex to rally atleast till 20,000 levels!
Last week we said "A close observation of internal wave structure on smaller time frame suggests that a minuttee 3rd wave rally might be near an end we shall see short term consolidation. Market breadth was not that promising for a day or 2 in between suggesting we might soon consolidate and enter into wave v of [iii]" This is perfectly how market moved in form of minuttee 4th wave and starting 5th wave of [iii]
There are no signs of exhaustion as yet and we still continue to ride the trend upwards.
A move down below 19770 could suggest we are in wave [iv] and can expect some retracement of current steep movement up
At current levels current wave [iii] is approximately equal to wave [i] and we do not rule out the possibility of wave [iii] reaching till 20600 to 21000 - 1.236 / 1.382 * Wave [i] as long as 19700 level is intact!
Caution: When trend changes, a steep correction cannot be ruled out given the steepness in rise and so a strict Risk Management, Position sizing and use of stop losses is extremely important. Complacency can take over even the best of the traders during such times and we shall pinch ourselves from time to time to be awake and not loose our foresightedness...

1 comment:

  1. Excellent analysis Mr. Kyal. I am regular follower to your blog. Could you confirm if we have already entered into the [v]th wave of 5th.And what will be the target for this 5th wave.