Tech Musings Review

In my last post on Nifty on 6^th march 2013  I wrote “Traders can go long on market with a stop of 5600 and target of 5900 on Nifty. March may see euphoric rallies (atleast during the first half) but market may top out in this month. We will have to wait for confirmation on charts.”

 

When I wrote this mail Nifty was trading at 5780, It moved up 200 points in one week to reach 5945 levels and than crashed. Market was very euphoric just as I had expected it to be during this rise.

If we look at the given (monthly) chart of Nifty, we can see that Nifty is now very precariously close to breaking the long term uptrend which started in January 2003. Although we have pulled back from this trend line multiple times, I expect it to be broken sooner or later, which means that Nifty is poised for deeper correction.

So readers should watch out for Nifty closing below 5500 levels on monthly closing basis which will invite a sharp and deep correction in markets.

Next chart is a yearly chart of sensex. Here we can see that long term trend line in sensex is at 13000 levels which also coincide with 38.2% retracement levels. Any break down in sensex below 18000 will see markets falling upto 13000 levels in worst case at which point it will produce a golden buying opportunity. Investors are urged not to wait for 13000 but start investing in tranches even if market falls to 16000 levels and invest at every 1000 points decline on sensex.

Third chart is of INR. As per my reading INR is poised for long term breakout. Any closing above 55.50 and 56.50 will cause sharp depreciation in INR and it will move towards 60 level if not more.

The last chart is of yen. Yen did 50% retracement of its down move which started in 2007. Yen faces significant resistance at 100 levels and can be shorted here with a target of 94 – 90 - 87 and stop loss of 102 on closing basis.

Tech Musing Review - commodities

Yesterday was one of the most volatile day in precious metals history, Gold and silver both corrected by around 10%. I initiated a bearish call on gold on 14^th December 2012 and reiterated my call on 16^th February 2013. Since then gold is down by 20% while silver is down by 30%

The downside momentum in gold was much sharper than I expected. I felt that gold will give a pause around 1520 before it crash to 1435 levels and below.  

If we look at the long term chart of gold we can see that quarterly trend line support in gold is exactly at 1350 levels.  38.2% retracement will be over at 1200 levels and 50% retracement will be over at 1000 levels. 

AS per my chart reading unless gold falls below 1000 level it will still be in a uptrend. This correction is just second leg of a large upmove. But since the upmove itself lasted for more than 10 years this correction will may also last for 3 years or more. Hence I don’t expect any sustained bull run in gold anytime sooner, but I am also not a long term bear on gold unless it breaks below 1000. My best guess is that gold will move down and consolidate towards 1200 levels.

Similarly silver corrected much more than gold and is down by 30% since 14^th December.

 

Similarly I initiated my short call on Crude oil on 29^th September 2012 @ 92USD and reiterated my call on 16^th February 2013 @ 95.86 USD.

Nymex crude has also corrected to 87.33 USD a barrel today. I expect this correction to continue and Nymex crude to fell around 80 USD levels.

 

Summary:-

1.      Expect gold to consolidate at 1200 levels.

2.      Expect silver to consolidate at around 20 USD levels

3.      Expect Nymex crude to fall to 80 USD levels