BSE SENSEX Analysis April 2015 (W,M)
Created on Wednesday, 01 April 2015 00:46
Written by Austin Galt
Since the last analysis, price put in a marginally higher high before reversing back down. Let’s check out the situation using the weekly and monthly charts.
BSE SENSEX WEEKLY CHART
We can see price traded marginally higher at the beginning of March putting in a high at 30024. This was a false break high.
This high was accompanied by a quadruple bearish divergence on the Relative Strength Indicator (RSI) and a quintuple bearish divergence on the Moving Average Convergence Divergence (MACD) indicator.
Price has subsequently traded below the first previous swing low which was set in February 2015. However, to really confirm the downtrend I would like to see price bust below the December 2014 low at 26469 and the October 2014 low at 25910. I expect this to occur in April.
The Parabolic Stop and Reverse (PSAR) indicator now has a bearish bias after the dots on the downside were busted last week.
BSE SENSEX MONTHLY CHART
The PSAR indicator now has a bearish bias after price busted the dots on the downside in March. I think that is it. The bull market is done.
The recent high was accompanied by a bearish divergence on the RSI while the Stochastic and MACD indicators are both showing a bearish crossover.
So where is this correction likely to bottom?
I have drawn two horizontal lines. The higher line represents the 2008 high at 21206 while the lower line represents the 2011 low at 15135. I expect the final low to be somewhere in between these two levels.
I have added Fibonacci retracement levels of the move up from 2009 low to recent high and the two levels I am focusing on most for the final pullback low are the 50% level at 19035 and the 61.8% level at 16442.
Also, I have added 100 period (red) and 200 period (black) moving averages which show the overall bull market in place with the red line above the black line. I am looking for the final pullback low to be around support from one of these averages. Time will tell.
Summing up, I believe a bear trend is now in its infancy and will only be done once at least 30% has been wiped off the value of the index.