April 17, 2017

Neowave outlook for market

...Even by conventional Technical Analysis, gap-up action creates technical support for the Future market action. Indeed, lending importance to the huge gap-up area, we had shifted the starting point of “g” from 9th March to 27th March. At last week’s low, Sensex was less than 100 pts away the gap-up area.

Typical of Triangle, the b-leg looks “slower”, i.e. it has consumed 6 days to retrace 67% of 6-day long a-leg so far. It could retrace more of a-leg, but should not ideally break the starting point of the a-leg.

For the fresh week, accordingly, we may watch if the b-leg holds the gap-up area of 14th March or not. If it does hold the said gap-up area, then we could expect an upward c-leg of the Ending Triangle.

Due to what we suspect Triangle with “contracting” legs inside “g”, trading environment could turn narrower, choppy & tricky until it breaks out from the triangular situation.

We may have to look for Diametric possibility for “g” if b-leg turns bigger than a-leg. Completion of “g” would be indicated by faster retracement of its last leg. This is yet to happen.

In the meanwhile, Sensex has gone nowhere after having entered our “Bubble Territory” shown on the following chart of Nifty PE Ratio.

Read more at http://content.icicidirect.com/ULFiles/UploadFile_201741711241.asp

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