Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17
Physical Metals Demand Plus Manipulation Suits Will Break Paper Market - 20th Mar 17
Stock Market Uncertainty Following Interest Rate Increase - Will Uptrend Continue? - 20th Mar 17
Precious Metals : Who’s in Charge ? - 20th Mar 17
Stock Market Correction Continues - 20th Mar 17
Why The Status Quo Is Under Increasing Attack By 'Populist People Power' - 20th Mar 17
Why the SNP WILL Destroy Scotland, Exit UK Single Market for EU - IndyRef2 - 19th Mar 17
Crypto Craziness: Bitcoin Plunges on Fork Concerns, Steem Skyrockets and Dash Surges Above $100 - 19th Mar 17
What ‘Ice-Nine’ Means for Your Money - 19th Mar 17
Stock Market 4 Year Cycle - 18th Mar 17
The Only Article You Need to Read to Understand the Trump Phenomenon - 17th Mar 17
Janet Yellen Just Popped the Stock Market Bubble - 17th Mar 17
Financial Crisis, Steve Eisman: Smart, Lucky, Abrasive & Now One Of Them - 17th Mar 17
Gold Cup – Horse Racing’s Greatest Show, Gambling and ‘Going for Gold’ - 17th Mar 17
Trader Education Week - Free Event to Help You Learn to Spot Trading Opportunities - 17th Mar 17
$1.4 Trillion of SPX Notionals Due to Expire - 17th Mar 17
Preserving Order Amid Change in NAFTA, U.S. Sovereignty v. WTO - 17th Mar 17
3 Maps That Explain Why Syria Raqqa Battle Will Drag On - 17th Mar 17
Crude Oil Price Outlook 2017 - Video - 16th Mar 17
Dutch and French Electons - Winners are Losers and Left is Right - 16th Mar 17
The Straddle Trade Stock Market Brief - 16th Mar 17
Gold Up 1.8%, Silver Up 2.6% After Dovish Fed Signals Slow Interest Rate Rises - 16th Mar 17
Stocks Get Close To Record High Again As Fed Hikes Interest Rates - 16th Mar 17
Scotland Second Independence Referendum War - SNP Determined to Destroy the UK - 16th Mar 17
Here’s How Pharma Is Using AI Deep Learning To Cure Aging - 16th Mar 17
Stock Market Chaos in the Chicken Coop - 15th Mar 17
Gold and Silver Price Manipulation: The Biggest Financial Crime In History - 15th Mar 17
“Ryancare” Dead on Arrival: Can We Please Now Try Single Payer? - 15th Mar 17
Fanaticism, Stock Market Crash 2017 or Continuation of Bull Market - 15th Mar 17
Stock Market Most Overvalued On Record — Worse Than 1929? - 15th Mar 17
Desperate Saudi Arabia Turns to Asia for Investment - 15th Mar 17
Startups Will Define the Future of US Employment - 15th Mar 17
Fed Rate Hikes, Fiscal vs. Monetary Policy and Why Again the Case for Gold? - 15th Mar 17
SNP Declare Scotland to Commit Economic Suicide Early 2019, 2nd Independence Referendum - 14th Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

India Stock Market BSE SENSEX Bombay's Last Hurrah

Stock-Markets / India Feb 21, 2016 - 05:03 AM GMT

By: Austin_Galt

Stock-Markets

The BSE SENSEX is the Indian stock index which trades out of Mumbai or Bombay for those with a sense of nostalgia. Price hit a low of 22600 on the 12th February 2016 which was just over 24% down from the 2015 high of 30024.

So, is that the end of the bear market? In my opinion, the answer is both yes and no. What? That sounds like I'm having a bob each way which is not uncommon for many technical analysts, I dare say!


But that ain't my style. To find out exactly what I mean, let's undertake a thorough examination of the technicals. We'll begin with the weekly and monthly charts before zooming in with the daily chart and then zooming right back out for some big picture analysis with the yearly chart.

BSE SENSEX Weekly Chart

BSE SENSEX Weekly Chart

The green highlighted circle denotes the area whereby price really began to explode higher parabolic style. Price often corrects to these exact areas and that is exactly what has occurred here.

The Bollinger Bands show the recent low traded well below the lower band which is a common feature found at solid lows.

I have added Fibonacci retracement levels of the move up from 2011 low to 2015 high and this low was bang on support from the 50% level.

The Fibonacci Fan shows this low was right around support from the 61.8% angle.

The black line is the 200 period moving average and looks to have provided support.

The RSI shows a bullish divergence at this price low.

The MACD indicator is still bearish although the averages appear to be curling back up and price continuing higher from here will see a bullish crossover occurring shortly.

So, the recent low was at some very good support areas that all intersected each other at this point in time. I believe price is now headed higher. But to new all time highs?

Let's move on to the monthly chart.

BSE SENSEX Monthly Chart

BSE SENSEX Monthly Chart

The Bollinger Bands show price pushing down into the lower band with this month's low already trading well below the lower band. I am now looking for price to bounce back possibly as high as the upper band. However, that doesn't necessarily mean new all time highs.

The PSAR indicator is bearish with the dots above price and I expect price to bust that resistance on this move higher. The dots currently stand at 26741.

The Fibonacci Fan drawn from the 2009 low to 2015 high shows price consolidating a little around the 23.6% angle before falling to just below the 38.2% angle. Price has subsequently bounced back up above this angle and I now favour a move back up to the 23.6% angle which will act as resistance.

The blue line denotes the 50 period moving average and price looks to have found support at this line.

The RSI shows a bearish divergence at the all time high while it has now made a new low in oversold territory. I expect a big rally now but considering there are no bullish divergences at this low I favour this will be a bear rally only and fail to make new all time highs.

The MACD indicator is bearish but a multi-month bear rally will likely see a bullish crossover occur in the months ahead.

So, now that I am favouring a bear rally only from here, where is this bear rally likely to end?

Let's go to the daily chart to answer that question.

BSE SENSEX Daily Chart

BSE SENSEX Daily Chart

I have drawn a bearish Fibonacci Fan which shows the recent low bouncing off support from the 61.8% angle.

The RSI shows multiple bullish divergences forming at this price low while the MACD indicator has just made a bullish crossover.

The horizontal line denotes the previous swing high at 25002 and price taking out that level will confirm the rally is indeed in progress.

So, how high do I expect this bear rally to trade?

First rallies in new bear trends often make deep retracements and that is my expectation here. I have added Fibonacci retracement levels of the move down from all time high to recent low and my minimum expectation is for price to reach the 76.4% level at 28272 while the 88.6% level at 29178 is not to be discounted.

So, if price rallying back to at least the 76.4% level would imply a move up of over 25%. That is considered a bull market. This explains me having a bob each way on whether or not the bear market is over. This bear rally could be considered a new bull market within the overall new bear market.

Let's wrap it up by checking out the big picture with the yearly chart.

BSE SENSEX Yearly Chart

BSE SENSEX Yearly Chart

The 2015 candle was a bearish reversal with some follow through to the downside already having taken place. I now expect a move back up to test the high. Now, while I believe a bear rally only is t be seen, the bear case is actually not out of the question but price would need to take out the 2015 high this yearthereby creating a bullish outside reversal candle for 2016. That would mean a rally of over 33% this year. It is certainly possible but I just don't favour it.

I have drawn an Andrew's Pitchfork which shows the recent low right around the internal line within the lower channel. I now expect price to do some more work around the middle band before a massive downtrend begins to play out.

As for the long term view, after a major secondary high is in place, I believe price is set to get wiped out as we head into the end of the decade.

I have added Fibonacci retracement levels of the move up from 2001 low to 2015 high and price clipping the 61.8% level at 13073 will be a target to look for in the years ahead.

The RSI shows a bearish divergence forming at last year's high and this is the yearly chart no less.

The Stochastic indicator is now bearish and the last time this occurred was in 2008 and price subsequently fell over 60%. I expect a similar sized drop although the pattern for that drop should be slightly different and a significant bear rally now will see to that.

Summing up, I expect 2016 to be the last hurrah for the bulls in Bombay.

By Austin Galt

www.thevoodooanalyst.com 

Austin Galt is The Voodoo Analyst. I have studied charts for over 20 years and am currently a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts, there seemed to be a dearth of technical analysts. My aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

Email - info@thevoodooanalyst.com 

My website is www.thevoodooanalyst.com 

© 2016 Copyright  The Voodoo Analyst - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Austin Galt Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife