Nearing the Top AGAIN!

Sensex

Cycle analysis indicates a top is near. Please beware Cycle analysis does not gurantee a down move but only price confirmation does. It does provide time sensitivity to the analysis. Timing the market is becoming increasingly important given the sideways direction and TIME is the most difficult parameter to predict. Cycle analysis does provide some highlight on TIME

William %R as shown is providing a very good indication of Trending or a Trading range market

Past 6-7 months William %R shows Trading range market

A movement tween -60 and -90 will indicate a strong downward trending market

Wait for 17100 levels to be taken out. A further negative confirmation of bigger move down will be obtained below 16500!

BEARS TRAPPED YET AGAIN! But Negative Divergence with Rupee and falling weekly momentum continues!!!

Sensex Weekly Momentum

INR - Sensex Divergence

We were expecting Sensex to pause near 76.4% retracement levels i.e. around 17500 but the rally continued

This is for the 3rd time that Bears have been trapped on the wrong side of the trend. This exactly explains why MONEY and RISK management are equally important along with Technical / Fundamental analysis

Avoid Stop loss and the EMOTIONAL IMBALANCE will be much more than the FINANCIAL IMBALANCE

Please beware the future direction of the Markets are only probabilistic and it can become increasingly difficult to predict when Mr. Market is not moving in any clear trend

Still good amount of money could have been made in the down move in MAY as Sensex moved exactly as we were anticipating only to give away a part of profit in the current rally as it should have triggered your stop loss levels a week before, thereby locking reasonable amount of net profit

Sensex is almost at the previous top around 18000 now

This warrants us to adopt the alternative scenario we mentioned earlier that wave 5 is still in progress

There are couple of ways in which the sub-divisions of ongoing wave 5 can be labeled, one of acceptable wave count is as shown

The reason for me to still believe that the intermediate top is near is the weekly RSI divergence and divergence of Sensex with INR

Sensex is near the previous top but USDINR has still retraced only 61.8% of its gain from the bottom of 44.30. This along with waning weekly momentum suggests we are in wave 5 and top should be in place soon if not yet!

A move below 17100 levels will provide negative confirmation. Wait for that level to be taken out and this time it will probably be the BULLS that will run for cover!!!

Caution: Please do not try to pick up a top, It cannot be predicted even after month long divergences unless it has occurred.

Corrective wave continues further upwards!

Sensex

Given the recent strength in Senex expect wave 2/B to continue further up taking prices near 76.4% retracement levels of 17500

Also previous 4th wave resistance lies at 17400 level

Wave c = wave a at 17450 levels

All these give a potential resistance zone as 17400 - 17500 from where prices should turn lower

Time Cycles also suggest rally to continue for couple of days before we turn down in a major move

It can be dangerous to trade this corrective wave upward as it can develop into a complex pattern without much potential for upside

Wait for prices to take out lows of wave b before initiating a short position!

Wave 2/B a 3 wave structure near completion!

Sensex

In our previous blog we showed the path of minor corrective wave and that is exactly how market moved. Minuttee wave c is now 76.4% of wave a

We are expecting market to turn down from here soon

This wave down will be much steeper and faster than anyone can anticipate

A move below 16300 will confirm the negativity and our preferred scenario

As we showed cycle displacement previously, market actually bottomed very near to that. Cycle length is reduced lately.

Any movement up in the form of 5 wave structure will negate this scenario and we have to adopt alternate view that the larger 5th wave is still ongoing.

Wait and watch for 16300 levels to be taken out!