There is a crucial hurdle ahead for the Nifty. The outlook for several stocks seems very bullish, but let's consider for a minute if a sharp reversal could be imminent.
See the chart with some long-term trendlines that mysteriously seem to connect near the same point. Notice the gentle upward-sloping trendline in dark red? That's the line that connects the top of the Feb '00 top of 1818.15 to the Jan '04 top of 2014.65. And guess where we are now? Standing just beneath that line... in fact, we closed a mere 1 point below that line on 24 Dec. See that upward-sloping wedge-like pattern, starting 22 Nov? It looks suspiciously like a terminal. The bearish implications of this pattern have not been negated as yet simply because the break of the 1-3 trendline by wave '5' that occured on Wednesday-Friday is a very common occurance. Couple that with the trading volumes ... a huge jump over the previous days, indicative more of the culmination of a trend than a continuation ... and add THAT to the proximity to the long-term trendline mentioned above, and we might have a dangerous situation!!!
Here are some very interesting Gann time and price relationships. The move from the top on 23 Feb '00 to top on 9 Jan '04 took 1416 days. The move from the top of Jan '04 to 27 Dec '04 will have consumed 353 days, or almost exactly 1416/4 = 354 days, thereby making it an important time for change in trend. The number of days consumed in the move up from the 17 May '04 bottom of 1292.2 is 224 on 27 Dec '04. And, 224/256 = 7/8, where 256 days is the time taken for the bull run of 2003, from April '03 low to Jan '04 top. Also, 224/129 is approx. 7/4, making the time relationships even more forceful, indicating change of trend. What's more, 2065.5 lies on an important Square of Nine relationship with the May '04 bottom of 1292.2, perhaps indicating the end of a move. Also, the index has shown either a major or intermediate top or bottom, around 27-28 Dec of every year (except 1996 and 2003).
The indicators are giving mixed signals. While the 14-day RSI has broken out of a contracting triangle pattern, indicating a major upmove ahead, the MACD, 14-day CCI and CMO are forming multiple bearish divergences. In fact, the MACD has broken below a crucial support line at around 41.
If the terminal is confirmed by a fast break below the 2-4 trendline, the downside target would be at least 1845. On the other hand, if the Nifty survives above 2087, then the minimum I see it going to is 2111 in this particular upmove.
See the chart with some long-term trendlines that mysteriously seem to connect near the same point. Notice the gentle upward-sloping trendline in dark red? That's the line that connects the top of the Feb '00 top of 1818.15 to the Jan '04 top of 2014.65. And guess where we are now? Standing just beneath that line... in fact, we closed a mere 1 point below that line on 24 Dec. See that upward-sloping wedge-like pattern, starting 22 Nov? It looks suspiciously like a terminal. The bearish implications of this pattern have not been negated as yet simply because the break of the 1-3 trendline by wave '5' that occured on Wednesday-Friday is a very common occurance. Couple that with the trading volumes ... a huge jump over the previous days, indicative more of the culmination of a trend than a continuation ... and add THAT to the proximity to the long-term trendline mentioned above, and we might have a dangerous situation!!!
Here are some very interesting Gann time and price relationships. The move from the top on 23 Feb '00 to top on 9 Jan '04 took 1416 days. The move from the top of Jan '04 to 27 Dec '04 will have consumed 353 days, or almost exactly 1416/4 = 354 days, thereby making it an important time for change in trend. The number of days consumed in the move up from the 17 May '04 bottom of 1292.2 is 224 on 27 Dec '04. And, 224/256 = 7/8, where 256 days is the time taken for the bull run of 2003, from April '03 low to Jan '04 top. Also, 224/129 is approx. 7/4, making the time relationships even more forceful, indicating change of trend. What's more, 2065.5 lies on an important Square of Nine relationship with the May '04 bottom of 1292.2, perhaps indicating the end of a move. Also, the index has shown either a major or intermediate top or bottom, around 27-28 Dec of every year (except 1996 and 2003).
The indicators are giving mixed signals. While the 14-day RSI has broken out of a contracting triangle pattern, indicating a major upmove ahead, the MACD, 14-day CCI and CMO are forming multiple bearish divergences. In fact, the MACD has broken below a crucial support line at around 41.
If the terminal is confirmed by a fast break below the 2-4 trendline, the downside target would be at least 1845. On the other hand, if the Nifty survives above 2087, then the minimum I see it going to is 2111 in this particular upmove.
