Fresh 2009 Highs for India NIFTY into Resistance

Sep 8, 2009: 6:14 PM CST

India’s “Nifty 50” Stock Market Index (symbol $CNXN in StockCharts.com) broke to a new 2009 high today, but before we get too bullish, let’s take a look at what bulls need to overcome to keep the rally going – hint… Fibonacci and a Rising Wedge.

Nifty Weekly Chart:

The weekly chart shows a very powerful uptrend, taking us from the 2,250 lows to the recent 4,800 index highs – an impressive doubling in price in just under a year’s time.

To keep the bullish party going, buyers in the index need to overcome potential overhead resistance in the form of the 61.8% Fibonacci level as drawn from the 2008 highs to the lows – the rally up has been a retracement of that steep price drop.

There’s also the potential break (up from here to dis-confirm the pattern or down beneath 4,400 to confirm it) of the Bearish Rising Wedge as seen best from the Daily chart… along with the negative momentum divergence which is showing up on both the weekly and daily frames.

Nifty Daily Chart:

The daily chart gives us a better perspective of the ‘bumpy’ ride investors have endured since the June 2009 highs… which almost resembles a “Three Push” negative momentum divergence (or price pattern).

The wedge formation and negative divergences into resistance are clearer from this frame.

If bulls can clear 4,800 and then 5,000, it would be a major victory against the backdrop of a Fibonacci resistance level, bearish rising wedge, and triple-swing negative momentum divergence pattern all as labeled above.

If history is any guide, it will teach that 2009 has been the year when bulls have trampled over any bearish resistance or divergences on technical (price) charts.  Will it happen again?  Just a few more days (or next week) and we’ll know for sure!

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

4 Comments

4 Responses to “Fresh 2009 Highs for India NIFTY into Resistance”

  1. Bob Says:

    Wow, it had been floating around there somewhere but you finally brought it to light for me. From failed rising wedges to failed head and shoulder patterns…. this market has just marched up the whole time.

    Great post

  2. sandew Says:

    With usual TA tools like Momentum Divergence and like becoming common knowledge in 2009, is it time for traders to now add other new tools in their arsenal to beat the market. The new dispensation in this era of globalized internet connected one-world appears to be 'short-term' ranging from 20 minutes to 2 hours. Anything above is eternity ! New era, new rules.
    Thank you for the post – back here we expect current dollar weakness to propel fund inflow from USA to EMs like India.

    New Delhi

  3. pankaj shah Says:

    thanks for update. very good analysis.i will like to draw yr attention to thah time taken from march lows to start of wedge that was 4693 on 12/06/09 is 63 trading days and time taken from 12/06/09 to today it is 63 days . a chance of an euality if we r correcting as Ba-Bb-Bc.time taken by Ba is equal to time taken by Bb+Bc.so ther is a chance that we might have completed B at 61.8% lvl or we very close to complete in few days.
    have a look at this link.what i want to convey u.

    http://2.bp.blogspot.com/_fJ202bMkEkU/SqIN26yq1

    pankaj shah

    pankaj564.blogspot.com

  4. pankaj shah Says:

    thanks for update. very good analysis.i will like to draw yr attention to thah time taken from march lows to start of wedge that was 4693 on 12/06/09 is 63 trading days and time taken from 12/06/09 to today it is 63 days . a chance of an euality if we r correcting as Ba-Bb-Bc.time taken by Ba is equal to time taken by Bb+Bc.so ther is a chance that we might have completed B at 61.8% lvl or we very close to complete in few days.
    have a look at this link.what i want to convey u.

    http://2.bp.blogspot.com/_fJ202bMkEkU/SqIN26yq1

    pankaj shah

    pankaj564.blogspot.com