SENSEX TO HIT 12000?????

The question remains in every ones mind what is going to happen next in the stock market. Let me try to give you answer of your query.

I will give your answer with three different technical analysis theories.

(1)   Negative divergences on relative strength index.

In the first chart I have shown the relative strength and sensex weekly chart. From February 2010 sensex start up side from 15561 and hit 18047 but  in same duration relative strength miss to walk with sensex and continue make new low so creates negative condition now.

(2)   Fibonacci retracements

From the low of 7697 to all time high of 21206 I drawn retracements and sensex start coming down from the retracement resistance level  18033 so we are not able to cross the and sustation above the resistance on weekly charts so this indicates weakness ahead.

(3)   Fibonacci numbers

On weekly and monthly charts from the low of 8047 to high of 18047 on swing index index consumes 55weeks and 13 months on weekly and daily charts so both this numbers has big importance in Fibonacci to turn the long term trend of any index,stocks and commodity .

So we have created top after 55 week and 13 month so this can be big trend reversal.

How I arrive at target?

To get confirm down side first we need to apply dow theory and needs to break 15651 then negative divergences and breaking the channel of higher top and higher bottom will turn in to lower top and lower bottom and more selling will emerge and will take index to fill the gap of 12272 which was created when UPA wins the vote of confidence.

Another opinion is on Elliott wave if we assume from march 2009 after correction of 2008 over the index has moved from 8047 to 18047 and assume as per time series it has complete wave 1 and now corrective wave down 2 is start then normally it falls by 50 to 60% and if this is the case then 11800 would be target.

One of my favorite lines from technical analysis is technical analysis in general and Elliott wave has forecasted major market crash much ahead before someone knows and can understand about it like 2008 market crash.

So never under estimate the power of technical analysis when you also know the fundamental analysis.