Sunday, May 20, 2012

CNX Nifty 50 - Triple Screen 'Technical Analysis' - Week: 14 May to 18 May, 2012 - The Median and the Nifty..

Learnings from the Past Week:
We went into the last week with all screens showing red (click).
We said that the Bears would see the Dawn of 'Bull' times.
The Nifty shot up 100 points from the week's bottom on Friday (click).
This move was with the Fib61x (EOD) and 200 DMA (EOW) as supports.
Are the supports strong enough to warrant a decisive Bull up move- or is this a false dawn?
Lets find out...

Nifty 50: Long Term View (or) Month Chart, each candle is 1 month's price action (or) EOM Chart:  
CNX Nifty 50 - End of Month (EOM) Chart - 18 May, 2012. 

The EOM chart looks weak, with the Price below the 34 EMA.
You would have noticed by now, that the volume has been falling during this down move.
This means either that the real momentum is yet to kick in - or that the Bulls are just bidding time.

Nifty 50: Medium Term View (or) Week Chart, each candle is 1 week's price action (or) EOW Chart: 
CNX Nifty 50 - End of Week (EOW) Chart - 18 May, 2012.

The Nifty is at the Median, of our channel.
Bulls bounced off the 200 DMA - weekly.
We have a channel break favoring the Bears on the STS.
The long tail of the week's candle shows the Bull resilience.
Bulls had the volume up - Bears seem to keep it down - see the red and green arrows above.

Nifty 50: Short Term View (or) Day Chart, each candle is 1 week's price action  (or) EOD Chart:  
CNX Nifty 50 - End of Day (EOD) Chart - 18 May, 2012.

We notice that the MACD Histogram is getting shorter and heading to the plus zone.
The Nifty is at the Median, of  this smaller. EOD channel too.
Bulls found support on the the Fibonacci 61.8% of the 2008 low to 2010 high, marked on the EOD above.
The 34 EMA came within 15 points of bearishly crossing below the 200 DMA, on Friday's low.
Bounce from this low was 100 odd points.
The 5 EMA - EOD was the resistance for the Bulls on Friday.

Looking forward into next week:
Staying above the Fib 61x on the EOD & the 200 DMA on the EOW - the Bulls stay good for a strong up move.
Bearish cross of the 34 EMA & 200 DMA on the EOD, would be a long term blow for the bulls. 
Looking at the above and the rest of our weekly studies - one smells consolidation in the air.
Intra-week updates shall share that piece of the action.

BSE Sensex - Ichimoku Study - Week: 14 May to 18 May 2012 - Pink of Stealth

Our Conclusion of last week, was on the dot (click).

Last 7 Signals seen on BSE 30 - Week Chart (EOW) as on chart below:

1. The Kijun sen cross: Weak Bullish Signal (K)
2. The Flat Kumo: Bullish Signal (Ko)
3. The Tenkan Sen/Kijun Sen Cross: Weak Bullish Signal (T)
4. The Kumo Breakout: Bearish Signal (B)
5. Chikou Span Cross: Strong Bearish Signal (C)
6. The Kijun Sen Cross: Strong Bearish Signal (K)
7. The Tenkan Sen/Kijun Sen Cross: Strong Bearish Signal (T)

The arrows on the chart point to...

3. The Chikou Span (Pink Color Line) is stealthily approaching the Price line looking at crossing it maybe next week - that would be a Bullish Signal.
4. This week we see the Red Line (Tenkan Sen) cross the Blue line (Kijun Sen) from above. This signal is Bearish, also 'cause it happens below the Kumo its Strongly Bearish!.  
5. The Oscillator is ticking into the minus.

Ever since the Kumo Breakout (B) we have had 4 Red Weeks + 4 Bearish Signals in a row.
Next week the Longs have a shot at a Green Bullish Signal as in '3'.
Nifty although deep in the red currently - has a potential to pause and even reverse based on above.

BSE 30: Medium Term View (or) Week Chart (or) EOW with the Ichimoku Cloud:  
The BSE Sensex 30 - End of Week Chart - 18 May, 2012.  

Introduction (for New Readers):

.....Regulars can skip this part......

We do a weekly Ichimoku study, to complement our 'Triple Screen Technical Analysis', of the markets that we track, in our quest to master Technical Analysis.

When taking the 'weekly' time frame, to use the Ichimoku Cloud, we need to consider the following..

The standard settings for an Ichimoku Kinko Hyo chart are 9, 26, 52 and are used on EOD charts.  
When Ichimoku was created back in the 1930s, a trading week was 6 days long.  So we have one and a half week(9), one month(26) and two months(52). 
Now that the trading week is 5 days, we should actually use 7,  22 and 44 instead. 
However, the majority of systems, worldwide, still use the old settings 9, 26, 52. 

We need to study markets, on a weekly basis on this Blog.  
How do we fit 52, 26 and 9 into that need?  With one candle being one week?
There are 52 weeks in a year, 26 weeks form two quarters (or a half year) and 9 weeks equal about 2 months.  Fits the old logic - albeit differently.
Presto, we have a longer term view with the same settings!

So, if you like to move off the beaten track, for a change... do read on...

Quick Reference : 
Chikou Span - pink line,
Kijun Sen - blue line, 
Senkou Span A - black line, 
Senkou Span B - grey line, 
Kumo - grey shaded area,
Tenkan Sen - red line.

Useful resources (free) from the Web: