Market is finding hard to penetrate through 8500-8600 level. Charts are giving benefit of doubt to BULLs but unless market breaks through 8600 level, this can all fall apart very soon. On what basis we came to that conclusion?
Market managed to get above MA(100), however MA(100) slipped below MA(200) hence we have conflicting signals now. However, McClellan index has turned around and above EMA(59) for now.
In daily chart below, take a good look at last 10 months and marks LS, H & RS.
LS - Left Shoulder
RS - Right Shoulder
H - Head of the Shoulder
You can easily visualize, Head-Shoulder pattern and unless market breaks above 8600 area or goes sideways, most likely it will fall back to 8000 level completing the pattern and eventually breaking the neck line.
LS - Left Shoulder
RS - Right Shoulder
H - Head of the Shoulder
You can easily visualize, Head-Shoulder pattern and unless market breaks above 8600 area or goes sideways, most likely it will fall back to 8000 level completing the pattern and eventually breaking the neck line.
Weekly chart is showing similar pattern and we shall see how it unfolds in coming weeks ahead. RSI is soon approaching overbought territory.
Charts are giving us mixed signals yet benefit of doubt goes to BULLs. But its better to remain cautious as market can easily fall apart. As long as market remains above MA(50) line BULLs have upper hand. Market has to break above 8600 level to invalidate the head-Shoulder pattern .
What does it mean for our Investments?
Market trying to turn around yet remain cautious...
What does it mean for our Investments?
- Mutual Funds - If still invested in equities then stay invested as market might be turning around. If in cash/ FDs/ liquid funds then the low risk entry was near MA(50), however the risk is elevated and one needs to be ready to pull the plug.
- Stocks - ONLY invest in strong patterns with good earnings guidance and DO NOT forget to have STOP LIMIT on open positions. When market is in correction, it will drag everything down with it. Check out our trade size calculator to manage your risk along with potential buy candidates watch list.
Market trying to turn around yet remain cautious...