BSE SENSEX Update February 2015 (W)
Created on Thursday, 05 February 2015 06:45
Written by Austin Galt
I decided to have another look at the BSE SENSEX. While price has traded as expected in recent times, I do believe we are close to the ultimate top and hence wanted to delve deeper into the recent top. I have done this using the weekly chart. Let’s take a look.
BSE SENSEX WEEKLY CHART
Now the thing that really stood out to me with this chart was the multiple bearish divergences. Let’s run through them.
The Relative Strength Indicator (RSI) is showing a triple bearish divergence. This usually leads to a significant decline.
The Moving Average Convergence Divergence (MACD) indicator is showing a quadruple bearish divergence. It is not abnormal for the MACD indicator to show this amount of bearish divergences and I liken it to the effect of a triple bearish divergence on the RSI.
The Momentum indicator is showing a quintuple bearish divergence. The momentum indicator usually peaks before both the RSI and MACD indicator and I liken a quintuple bearish divergence on this indicator with a triple bearish divergence on the RSI.
In my recent analysis I stated I thought we had a short term top in place. These multiple bearish divergences on all three indicators lead me to believe we may well have the final bull market top in place.
The Bollinger Bands show the recent top traded well above the upper band which is consistent with solid tops.
Also, the recent top was a false break of the November 2014 high which is denoted by the horizontal line. Final tops are often of the false break variety and I suspect that to be the case here.
I have drawn a black uptrend line which has pretty much held the lows of the uptrend for over a year now. I believe breaking down below this trend line will provide confirmation the bull market is finally over.
Summing up, I believe the recent top at 29844 was not only a short term top but is likely to be a long term top.