The ferocious up move in the last 3 days broke through several technical barriers and one can reach several conclusions from the move. Let us try and explore each 1 of them.
1. The downward trend line joining all the tops from 9119 (The previous All time high in March 2015) has been convincingly broken on the up side. This means that the correction is over.
2. 7900-8000 was key resistance as well as previous top, that has been convincingly broken and now becomes a support level.
3. There will be retracements of the entire up move from 6825 to 81xx or higher. These would be buying opportunities. The retracements would approx be at 7850,7650, 7500 and worst case 7350. It is unlikely we would go below 7500.
4. On the up side the previous top of 8336 becomes a target. Also, trend lines give a resistance between 8300-8350.
5. The markets may correct the up move from 7715 to current levels before 1 more leg up.The targets for this correction could be 8000, 7950 or 7900.
6. From sell on rises, this has now become a buy on dips market.
7. The FIIs have bought for the last 3 days but still remain net sellers for the month of May.
8. The large caps have rallied. Now, they will take a breather and the mid caps will rally now.
9. The weekly Bollinger Bands indicate some cooling off for the markets.
The structure of the market has changed now. The correction is over and we have a bottom in place at 6825. We can never catch exact tops or bottoms and even if we get a chance t buy at 7500 or 7750 now, we should grab it with both hands.
1. The downward trend line joining all the tops from 9119 (The previous All time high in March 2015) has been convincingly broken on the up side. This means that the correction is over.
2. 7900-8000 was key resistance as well as previous top, that has been convincingly broken and now becomes a support level.
3. There will be retracements of the entire up move from 6825 to 81xx or higher. These would be buying opportunities. The retracements would approx be at 7850,7650, 7500 and worst case 7350. It is unlikely we would go below 7500.
4. On the up side the previous top of 8336 becomes a target. Also, trend lines give a resistance between 8300-8350.
5. The markets may correct the up move from 7715 to current levels before 1 more leg up.The targets for this correction could be 8000, 7950 or 7900.
6. From sell on rises, this has now become a buy on dips market.
7. The FIIs have bought for the last 3 days but still remain net sellers for the month of May.
8. The large caps have rallied. Now, they will take a breather and the mid caps will rally now.
9. The weekly Bollinger Bands indicate some cooling off for the markets.
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