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Indian Stock markets - July 10

Monsoons are here and just at the time monsoons showers hit Indian heartland, Indian markets seem to have rekindled hope.

Its very early to say the markets have turned back and the low of 12800 will stand. The way it looks, it may probably stand for some time. The MACD of index is turning positive though it is still in negative territory.

[Interpretation: MACD turning positive in a negative territory does not mean the asset is bullish, it just means the negativity is completed and we may see positiveness moving forward. This usually triggers a good bout of short covering which spurts the prices initially. Conventionally, bullishness can only be confirmed when the indicators move into positive territory.]


I have given you my take on MACD interpretation and going by that we are still in 'corrective' rally. This 'corrective rally' (I hate this jargonish word, btw) is recovery from the fall than a start of the new rally. The confirmation of new rally would come from re-testing of the lows around 12800. Though this is what we would ideally want, this is also what market / traders / investors also want, hence it becomes kinda self-fulfilling (a.k.a 2nd wave of Elliot)

So are we off to a rally, not yet. We may see some corrective, mainly with the selling pressure that we are expected to witness around the FALLING GAPS. Falling gaps are very important resistances.

[Falling Gaps: Falling gaps are the gaps created in the price chart when it is trending downward. Investors who were keen to exit at higher levels usually are not able to exit due to low volumes, and hence kinda chase the price low to exit. Then comes the falling gap. A gap where the investors see a big difference in the present price and the next price. THIS makes investors to hold back their selling. Usually they exit when the price touches or comes close to these levels.

The interpretation is very similar for all the gaps.]

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