Nifty - in a Corrective Channel !!

The current move from 4700 to the recent high of 5200+ in the Nifty is in a well defined upward corrective channel as seen on the Nifty chart.

Overhead resistance is at 5300 ( being the upper channel ) and thereafter a stronger resistance at 5400 levels.

Usually such a channels tend to get 'completed' when oscillators go in overbought zones.

Traders must watch out for the crucial support of 5100 - which , if broken should lead us to believe that the current corrective upmove is over.

Happy trading !

CA Rajiv D Khatlawala

Gold ... a Trend Reversal Pattern ?

Is GOLD REVERSING its TREND ???

Gold is forming what is technically called a "Head and Shoulder" formation. This is a trend reversal pattern suggesting a halt in the bullish trend .

The crucial level (based on the 'neckline' formation, to be watched is the 11500 level on Gold M contract. A break and close below this should lead us to the vicinity of the technical target of Rs 10000/-

The whole pattern will get negated now only on price rising above Rs.12350/-

Surely a security worth watching - even if you don't trade in Gold !!

Happy trading !
CA Rajiv D Khatlawala

Reliance Energy . . bullish Flag !

RELIANCE ENERGY

The scrip is showing signals of a potential upmove in the short term.

For the past few days it is moving in a narrow range - technically termed as a 'bullish flag'.

Short term traders can enter on break out of the range at Rs 1368 with a strict Stoploss at Rs 1290 for a target of Rs 1500+. ..

Long term investors may consider Rs 1100/- as the crucial support where the stock has seen multiple buying momentum.

Happy Trading

CA Rajiv D Khatlawala

The dollar Rupee - a revisit

(Above chart updated as of Apr 23, 2008)

After taking support at the crucial 61.80 % retracement , the dollar / rupee has shown signs of revival as it touched a high of 40.07 today (Apr 23) ..

I presume a close above 40.10 should give a further impetus to the dollar and thereafter I would be targeting 40.80 / 41 in the short / medium term . . .

Friends it is time to dig out stocks which should benefit from a depreciation of the rupee ( i.e. a rise in dollar against rupee) . ..

Happy trading !!

CA Rajiv D Khatlawala
More about me at www.pushpdin.com

Crompton - a good technical set-up!

The technical price chart of Crompton Greaves suggest a double bottom formation of the recent down move.

The price has closed positive today at Rs 272/- ( Apr 22)

The scrip is now ripe to test Rs 290 in the very short term and Rs 330/ in the medium term.

Keep a stoploss at Rs 248 ( for the target of Rs 330).... (Short term traders may keep Stoploss at Rs 258)

Incidentally TTML , RPL and the Sensex targets mentioned in earlier blog posts have performed well ...

Hope you all could take benefit !

Happy Trading

CA Rajiv D Khatlawala
Know more about me at www.pushpdin.com

Fibonacci in nature !

Most technical analysts use the fibonacci numbers and ratios while carrying out their analysis.

In fact most of the participants of my workshops on technical analysis are ashtonised by fibonacci especially when I provide them with real life examples of the relevance of these numbers and ratios.

So I thought that for the benefit of everyone, I may include a link to an interesting article which i found during my last Sunday's internet browsing session

The article is titled "Fibonacci in Nature" and contains a lot of examples of their ocurrence and recurrence.

Check out these links

http://www.world-mysteries.com/sci_17.htm
http://www.goldennumber.net/

I hope every one is enlightened further as to how little we know !

CA Rajiv D Khatlawala

TTML - a low risk entry !

TATA TELESERVICES .. a technical evaluation

After witnessing a rally from Mid-Aug 2007 from a level of Rs 25/- to a high Rs 65/- the scrip corrected back to Rs 25 levels in the recent market fall.

It is currently showing some signs of consolidating and it has a good support between Rs 25- Rs 30 levels. The scrip has closed near Rs 30/- after a long time.

The MACD, though in negative territory , is turning upwards suggesting a halt to the selling pressure.

Medium term investors can enter the stock on a break again now above Rs 30.25/- keeping a stoploss of Rs 26/-. Initial resistance is likely to be at Rs 35/- and once this is cleared (particularly with volumes) , the target for the investor will be in the region of Rs 42-44/-

Please note that these targets may take some time to come and I suggest those having a time frame of 3-4 months only need invest.

Happy Trading !

CA Rajiv D Khatlawala

The Sensex & Fibonacci ... current evaluation

The SENSEX and the FIBONACCI relevance.

Fibonacci retracement analysis plays an important role in technical analysis , expecially to identify support and resistance. The important ratios are 38.20% and 61.80% retracement of the price move (You can find more details on fibonacci in my book)

In the above chart of the Sensex, we observe that it has taken support at the 61.80% fibonacci retracement level. the move is marked from the recent low of 14680 on 18th March and the recent top of 16450 on 28th March.

The 61.80% fibonacci retracement level of this move comes near 15300 points and the Sensex has taken support at this level thrice during the past 10 trading days.

Thus at the present juncture we must keep a close watch on this 15300 Sensex level. If it breaks , expect some more selling and consequent fall.

On the upper side, a break above 16075 Sensex level should lead to a short term upmove to 16750-17000 area.

For the coming few days these will be the levels we should be watching !!

Happy trading !

CA Rajiv D Khatlawala

The Rupee Dollar... Where is it headed?

The Rupee Dollar - a technical perspective

After remaining below Rs. 40 levels for about six months (from Sept 07 to Feb 08), the Dollar/ Rupee rate touched Rs 40.70 and has since retraced 61.80% of its move ( 61.80% is a Fibonacci retracement level)

Also after it took support at Rs 39 thrice during the period Sept 07 to Feb 08 , the technical pattern visible was of a 'rounding bottom'- which is a reversal pattern. In this case it reverses the down trend in the Dollar against the rupee.

The current technical structure is in favor of the dollar rising further against the rupee ( i.e. rupee depreciating further).

My technical target over a period of the next few months would be Rs 41.60-41.90 per dollar.

The current price of dollar is Rs 40.02 and I expect the up move to restart once it breaks the resistance level of Rs 40.15 in coming days.

Probably those of you investing in stocks can take a cue from this and dig out stocks which can benefit from a depreciation in the Rupee!!

Happy Trading !

CA Rajiv D Khatlawala

Broad Price AREAS for NIFTY

Defining Price AREAS for the Nifty

During the course of daily analytical reviews and regular tracking of the Sensex / Nifty and (nowadays) even Dow Jones and the Asian markets; let us visualize the market from a slightly higher plane.

Please refer to the above chart of Nifty (as of April 5)

Since the Jan 21st fall, we observe (some what with a little surprise) that the Nifty has in-fact remained within the movement of the two days of the crash ( Jan 21st and Jan 22nd.)

Also for the past more than two months, it has remained within the range of these two days,

On the above chart , I have divided the price movement for the past two months in to two halves in a diagonal manner to provide us an idea of price movements and price areas.

Secondly i have provided a horizontal line depicting the mid-point of the high and low of the two days of January crash.

We observe that more recently Nifty is spending more time below the mid-point of 5075 points. Till the time this level of 5075 is broken on upside, there should be inherent weakness. The first indication of 'some' revival will be on Nifty closing above 4900.

As per our earlier analysis, the Nifty low of 4450 remains 'crucial' support level in the medium term and the bais is currently towards further down moves.

While the above analysis is true for the Nifty , the Sensex has already broken below the two days (crash days) low and hence may be acting as a precedent for the Nifty.

Surely time will tell.

CA Rajiv D Khatlawala

RPL - Awaiting a break out !!!

Reliance Petroleum Ltd.

The scrip has been stuck in a range of Rs 180 and Rs 140 for more than two months and the price pattern is that of a triangle - with lower intermediate highs and higher intermediate lows.

Currently the break out levels are Rs 177 on the upside and Rs 143 on the down side. Upon break out one can expect targets of Rs 210 ( for upside break out) or Rs 105 on down side break out.

The MACD though below zero, is showing signs of upmove - which will be confirmed once the break out occurs. The Longer term RSI ( not shown on the graph - being proprietary information) should also give a decisive indication on the occurrence of the break out.

The price has been consolidating around the 200 DMA which is another factor to be noted by longer term investors.

CA Rajiv D Khatlawala