image hosting
When i look at weekly TF, i simultaneously know how the current price structure is stacked against the bimonthly (9 period on TS), half yearly (26 period on KS) and yearly (52 period on KUMO).
The 50% retracement from the highest high to the lowest low of the last 2 months is at 5064, while 5240 represents 50% retracement of the last 6 months.
The 50% retracement of the highest high to lowest low in the DEC'2010 to MAY'2011 period is 5565
What does this info tell me....! Frankly, nothing at all...! we can move up from current price lvl...! we can move down...! we can move sideways...! As a trader, i want key reference level that i can use as a market-has-proven-you-wrong yardstick. I want to make a trading decision on likely direction and i need to know where my assumption is proven wrong (my stop loss).
Here i look at CS for my solution...!
5378 has been a very critical resistance-support area on the weekly tf. It has acted as important decision maker for long term players on 6 previous occasion. So this behaves as my key ref lvl.
A weekly close above this line will provide incentive for many long term players to really pump in the money. Till that time, all we see from FII/DII figures everyday is just plain shuffling of stocks. The net inflow is pathetic. This reinforces the belief that the big fish are not net-buyers but are just manipulating the index to make everyone feel the strength returning to the market.
The last pivot high on CS to give a range extension was 5648. After that all we see is a complex correction north.
A look at RSI for guidance on momentum. The pivot high on rsi is broken, but the last pivot high on rsi corresponds to 5648 lvl. It just means that we are in for a possible hidden divergence which can be a strong sell indicator, if stoch (cycle determinant) turns south and gives a short signal...!
Stop loss for this scenario remains at 5648 and exit is if we have a bar close above the 5378 mark and next week sees a follow up action above the high of the 5378 bar...!
