December 5, 2016

Neowave outlook of market

Last week, Index formed a bearish Inverted Hammer type candle as a follow-up to the bullish Hammer type candle in the preceding week. Thus, initially it looked like a +ve follow-up to Hammer, Index did turn volatile/tricky, as we argued, because the 200-day EMA had turned.

Remember, it takes 1-2 months to flatten a long term Moving Average like 200dEMA, before it can turn +ve. It only means that Index could remain volatile & tricky, at least for a few more weeks from here.

Due to the expected volatility, last week we wondered how strong a +ve follow-up to preceding week’s Hammer type candle would be. Yet, we targeted Index to achieve 38.2% to 61.8% retracement levels on the upside. Index reacted only after it hit the 50% retracement level.

For the fresh week, we wonder how strong the -ve follow-up to “Inverted Hammer” type candle, formed last week, would be.

Read more at http://content.icicidirect.com/ULFiles/UploadFile_2016125103432.asp

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