Till 8250 holds the counter rally stays intact.
Sensex Technical View :
In
the chart posted 2 days back it was stated that markets could also
drift down till 8300-8500 which would be around 80-85 % retracement
which is also a possibility in such corrections. Now let us list yet
again some technical observations.
1) 80-85% retracement.
After
markets bounced back from 7700 to 10945 we are seeing a correction of a
quick bear rally. In such a correction as per technicals could correct
to a max of 80-85 % also and the counter rally would remain in place.
The retracement zone is 8250-8400 in such a case. So till markets hold
above these levels the bear rally remains intact. A deviation below
this level would lead to a violent move. ( Before we saw violent moves
when markets dropped below the 11k zone which was an important pattern
and support zone ).
2) Downward Channel /Flag .
As
we see from the charts we are forming a flag type pattern. The drift
has continued on the lower side but is still in the flag or channel.
The major directional trigger could only be seen if markets cross the
flag with a volume supported move. Till we see a clear move above the
flag we will continue to watch this pattern.
3) Counter rally should last 20-40 sessions or 4-8 weeks.
Few
weeks back had put up this chart where we have discussed that markets
should sustain above the low of 7700 for 20-40 sessions or even 4-8
weeks.
Although
in previous rallies we bounced back 25 % in this we had a bounce of 42
% already but the fall was also 50 % . So it would be difficult to
guess whether we have already seen a top for the counter rally or we
still go beyond it. But ideally the markets should continue to close
above the 7700 zone for 4-8 weeks frm the low.
ALTERNATIVE MOVE :
Above
i have listed some of the technical observations which project towards
a possibility of 8250 holding on for some weeks. But what if markets
start closing below 8250 the next scenario could be very violent and
difficult to gauge. We will look into this scenario only if it comes
till then its a stoploss of 8200-8250 on Sensex for longs.
Stocks to watchout for :
It would be difficult to trade positional till Sensex doesnt cross 9500 or 8200 convincingly.
As of now the best bounce back candidates would be .
RIL , LnT , Idea , SBI, ICICI. LIC Housing , Punj Lloyd in the large caps.
Market Observations and Thoughts :
The
market consensus continues to remain very bearish with lots of
justifications for newer lows very quickly. Can markets surprise
against the consensus is the thing to watchout this week.
More updates on this section in the week.
Best Regards,
Nooresh
09819225396
http://nooreshtech.blogspot.com/
http://nooreshtech.blogspot.com/
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