BSE SENSEX Analysis February 2015 (D)
Created on Sunday, 01 February 2015 06:14
Written by Austin Galt
The Indian stock index, the BSE SENSEX, made new all time highs during the month of January. Price is trading as expected so let’s just give it a brief update to see what is likely for the month of February.
BSE SENSEX DAILY CHART
I have drawn a black uptrend line which has held the peaks of the recent move up. Price has only just hit this trend line again and subsequently turned down. I believe a short term high is now in place.
In future, I’d like to see price do an “up and over” of this trend line to put in the final bull market top before reversing back down.
There is clearly no technical damage at all to the bull trend and I expect this pullback to put in another higher low. Where is this higher low likely to be?
I have added Fibonacci retracement levels of the move up from December 2014 low to recent high. Personally, I favour a move back to the 61.8% level at 27736 or the 76.4% at 27252.
Also, I have drawn a horizontal line denoted the September 2014 high at 27354. Old highs often provide support in the future so around this level is another great candidate for the final pullback low.
Breaking below the December 2014 low at 26469 would look bearish and certainly breaking below the October 2014 low at 25910 would likely signify the bear market is on.
The Relative Strength Indicator (RSI) has moved down after a strong high. I’d like to see any subsequent high showing less high readings meaning strength is coming out of the uptrend.
The Moving Average Convergence Divergence (MACD) indicator looks to be threatening a bearish crossover.
So the uptrend still appears in a solid position while a pullback now should provide the springboard for the next upleg.