Higher Timeframe Charting India NIFTY and BSE into New Highs

Oct 21, 2013: 12:03 PM CST

India’s “Nifty 50” and Bombay Stock Exchange/Sensex broke to new highs recently along with the US Equity Indexes.

Let’s take a broader perspective beyond the daily charts to a Weekly “V-Spike” trendline channel and a larger Ascending Triangle Pattern on the Monthly Chart.

We’ll start with a comparison of the Monthly Charts:

CNXN India NIFTY 50 Technical Analysis Charting Chart Trend Monthly Chart Ascending Triangle

BSE Bombay Stock Exchange India Monthly Chart Technical Analysis

Using StockCharts data, we see the similarities in the monthly charts of the $CNXN (India’s Nifty 50) and the $BSE (Bombay Stock Exchange).

The pattern is a larger, multi-year Ascending Triangle structure with clear overhead resistance (trendline) into the 6,300 level in the Nifty 50 and 21,000 for the Bombay Stock Exchange.

Note the minor “break” or Bear Trap that occurred in August 2013 which I covered in the prior update “Support Bounce and Bear Trap” post.

We’ll be able to see this “trap and trend continuation” event on the Weekly Chart:

India NIFTY 50 Trendline Channel Trend Weekly Chart Technical Analysis

Note the Parallel Trendline Channel patterns (declining into 2012 and ascending from 2012 to present) along with the highlighted regions.

The “Sign of Strength” or initial trendline breakout occurred in early 2012 which set the stage for the future bullish trend reversal that continues to this day.

The factor to watch currently is the horizontal resistance into the prior highs from 6,200 to 6,300.  If the index can strongly break above 6,300, it would suggest the next price movement would be up toward the higher rising trendline of the pattern.

The same is true in the Bombay Stock Exchange Sensex Weekly Chart:

Bombay Stock Exchange BSE India Weekly Chart Technical Analysis Trend

The key level to watch in the BSE is the simple 21,000 round number reference level which reflects the prior high from late 2010.

Like the NIFTY 50, a clean breakthrough higher suggests that the uptrend movement will extend toward the rising trendline channel.

I did want to highlight the positive divergence into December 2011 which was the inflection low (reversal) point along with the negative momentum divergence into January 2013 which preceded a sharp retracement after the break above the upper trendline.

Continue monitoring the index relative to the prior high horizontal resistance trendline which – if broken – should lead to another swing higher toward the upper “parallel trendline channel” to continue the trend and pattern.

I’ll be discussing breakout, retracement, and reversal trading tactics live at the Las Vegas Traders Expo on November 22 – join me and your fellow traders at the free expo!

Corey Rosenbloom, CMT
Afraid to Trade.com

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

Corey’s new book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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