Tech Musings

In my previous post on Nifty written on 6^th September 2016 I wrote, “If we look at the current chart of Nifty we can see that the upside resistance exist between 9300 – 9500 levels. I don’t expect market to break above this resistance in short term. We may consolidate between 8000 – 9500 for next year or so before we finally break out of this zone and we have a bull market which will take nifty to 14000 -15000 levels by the end of 2020.”

When I wrote that blog Nifty was trading at 8895 and it peaked at around 8968 and has been correcting since then. Today Nifty closed at 8111 levels which is around 10% correction. 

If we look at the given chart of Sensex we can see that long term trend line support for Sensex lies at 24500 levels and long term resistance for Sensex is at around 30,000 levels. 

If we look at the yearly chart for Sensex it seems that index is forming a second consecutive doji.  As per my experience of technical analysis when an index or a stock is squeezed between long term trend line support and channel resistance the most like scenario is a breakout.  Hence I think next year can be a big bull market for Indian stocks. I would give a 65% probability to this scenario. The second possible scenario is a third consecutive doji which I think has less than 25% probability. 

In my previous post on INR written on 8^th January 2016, I wrote, “I expect the down trend in INR to continue it will gradually depreciate against USD due to inherent strength of the Indian economy and excellent management by the central government.”

Since then INR has been consolidating between 66 – 68. If we look at the current chart of INR it had broken out of the triangle pattern. The first resistance is at 69 and once that is taken we can see some serious depreciation in INR v.s USD

Summary:-

1.       Sensex should find long term support at 24500 levels

2.       If Sensex closes between 25000 – 26000 levels we can see a bull market in 2017

3.       The probability of a bull market is should be around 65% to  70%

4.       I won’t be surprised if index moves to 35000 levels in next two years.

5.       Expect INR to break above 69