To assess the overall view, I have attached the weekly chart.
- We will look at the trend line TL. You can see those 5 weeks ago, NIFTY had broken down from TL. It then tried to test the high of 5181, but failed and now heading southwards. It looks like getting close to confirmation of the 1-2-3 trend change. For this to happen, NIFTY has to close below 4539. Till then, theoretically, the up trend is intact.
- Look at the chart pattern being formed. The breakdown point is at 4700. A close bellow 4700 confirms the breakdown.
- Look at the last bar. It went up above the high of the prior week, failed and closed below, indicating extreme weakness on it way.
- Look at the trend indicator (proprietary) below the chart. You can see the clear divergence. Now compare with what happened at A and B. After the second touch that is after B it closed below the centerline triggering the sharp fall of 2008. This time too, after the second touch, at F, it is now heading downwards. For academic interest, look at points C and D. After the second touch, it went above the centerline and the rally started. So; you can see the systematic behavior of this indicator. That is after the second touch of this indicator, NIFTY changes the trend. Will the same happen this time too? It looks to so.
- Normally when the trend change is close by, some kind of news triggers the move. In 2008, it was the Sub-Prime crisis. But, this time, it is the so called "Dubai Jitters'. It is interesting to note that, whether it is purposefully or not, the much needed News Triggers happen when markets are Technically Ready to change direction.
With all the points combined, we can infer that Markets are ready for the next round of crash. Now where the markets are heading? I would say the first round of panic fall should take NIFTY to around 3150 in few weeks.
System indications: www.ftalarms.com has already given indications by giving SHORT signal to subscribers, there are now ready to reap profits from the next move.
