Bottom seems to be in place
As expected in our last technical analysis, Sensex moved back into the range to retest the bottoms. Several analysts seem to have now caught on with this assumption of Sensex retests.
The reasons for the retest were very simple. Apart from fundamentals which are still quite shaky, the markets across have been showing the signs of retesting. It was natural to assume Sensex too could go in for a retest. Technically however, what was good evidence was the emergence of a triangle like possibility, as we had mentioned earlier. The pattern has played out its first few legs and we would keenly watch if it indeed plays out as expected. Evidence, although of lesser priority in our opinion was based on Elliot wave analysis of Sensex. The short term chart of Sensex which had moved up from November bottom had moved in a five legged move. We assumed it to be to an initial impulse wave, but it is hard to come to conclusions based on Elliot’s. Hence, we took it on a lower priority. The implication was that there would be a retracement from the levels to ‘within range’
What is interesting is the retracement of the supposed five wave impulse wave has been very sharp with the ‘a’ creating a massive fall. I guess, we can now assume either this will lead to one more fall to logical 8600 level as a zigzag pattern or we may see the supposed ‘2’nd wave working itself out in to a converging triangle.
The reasons for the retest were very simple. Apart from fundamentals which are still quite shaky, the markets across have been showing the signs of retesting. It was natural to assume Sensex too could go in for a retest. Technically however, what was good evidence was the emergence of a triangle like possibility, as we had mentioned earlier. The pattern has played out its first few legs and we would keenly watch if it indeed plays out as expected. Evidence, although of lesser priority in our opinion was based on Elliot wave analysis of Sensex. The short term chart of Sensex which had moved up from November bottom had moved in a five legged move. We assumed it to be to an initial impulse wave, but it is hard to come to conclusions based on Elliot’s. Hence, we took it on a lower priority. The implication was that there would be a retracement from the levels to ‘within range’
What is interesting is the retracement of the supposed five wave impulse wave has been very sharp with the ‘a’ creating a massive fall. I guess, we can now assume either this will lead to one more fall to logical 8600 level as a zigzag pattern or we may see the supposed ‘2’nd wave working itself out in to a converging triangle.
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