Sensex: Time cycles at its best, Sensex Blue Print!!!

Sensex Daily chart: Previously mentioned on 25^th July 2011

Happened: Low formed exactly in October 1^st week

Sesnex: Time Cycles

Sensex 69 days Time cycles was first shown on 25^th July 2011. The cycle low at that time was marked on 5^th October 2011. When we revisited this chart with updated data it was a thrilling experience to see a low precisely made on 5^th October 2011 at 15760. The very next trading day Sensex opened Gap up at 16222, a gap up opening of more than 450 points. Time cycles cannot work more precisely than this one.

This is a real challenge to the critics and who believes Indian markets are manipulated and controlled by few large players having insider information. If that is the case the question to ask is, Is there a Blue print laid out which shows that every 69^th day a bottom should be formed in Indian markets that give rise to a rally for atleast 15 days?? Every cycle bottom resulted in a rally that lasted on an average 15 days.

Apart from that the each rally retraced the previous leg by exact 76.4% retracement i.e. the next leg of rally after the fall moved up 76.4% of downfall.

Each down move was also extremely systematic. Every down leg had 3 sub waves to it, in which the 3^rd down wave came very close to the 1^st down wave (marginally above / below) and also each 3^rd wave was associated with strong positive divergences.

Sensex is also moving within the down channel very systematically. Every time this channel is touched prices reverses, up from lower trendline of channel and down from upper trendline of channel.

Everything is so systematic that it cannot be controlled or manipulated but humans by default exhibits this natural phenomenon and makes prices move within channel, following 15 days rally, that retraces 76.4% of fall, with each down leg having 3 waves, and each 3^rd wave forming positive divergences!!!

If the same systematic approach continues the current rally is only in its 6^th day with approximately 9 more days to go and current up leg should also retrace 76.4% of previous down leg taking it near 18000 to 18300 levels which is also the upper end of the channel, 23.6% level of retracement level of entire rally since bottom of October 2008 (now act as resistance) and resistance line coming in from November 2009 lows (shown on 1^st chart). All these precisely converge together at 18000 – 18300 levels and this should be touched on 26^th October ( +/- 3 days).

Caution: Cycles are good as long as it works and there are no prior indications for a cycle to stop working. We are assuming the current 15 days rally cycle and 69 days bigger cycle is intact. Please understand Time remains the most difficult aspect in forecasting and Risk management remains extremely crucial even if we have a high probability setup with n number of studies indicating the same thing.