Readying for a blast...

Fig. 1. Nifty (Click for a bigger view)

Today's (8 Sep 08) rally of 100 odd points in Nifty has confirmed my last blog's optimism.

1. Nifty has bounced back convincingly from it's 50% retracement level of 4209. It has also made a new upper top at 4561 but the sudden burst may lead to some sharp sell-off also.

2. But whatever be in the near term movement, Nifty has now made a very bullish pattern called Adam & Eve Inverted Head & Shoulder. This is pointing to a target of 5170 in the next few weeks.

Inverted (and otherwise) Head & Shoulder patterns are almost 100% perfect in accuracy. In fact, if you scroll down and read my old blog written in 2006 after a 3500 points sell off in Nifty, I had pointed to an Inverted H&S pattern and even as the majority of the analysts were pointing towards 8900 level in Sensex, I said I will bet on a level of a new high at 13,000 or similar.

Fig. 2. Sensex on 98% buy(Click here for bigger view)

3. The Sensex chart on weekly basis has made a 98% BUY signal as per PRISM system (Fig. 2). While Sensex chart is showing a bearish double top around 15125, once above this (if possible in tomorrow's trade will be ideal), Sensex would also race towards the last hurdle (immediate) at 15,600.

The bullish Inverted H&S pattern is pointing towards - hold your breadth - 17,085!!!

These levels are not exact but may vary a bit because the figures have been derived from weekly figures.

On short term basis though, a sell off at several points is still very much possible and is very likely to happen. Those who have been stuck at higher levels during April/May '08 will take advantage of every up-move to exit.

And also the worry about the bearish double top at 4650 that led to a sell-off only last month. Not to mention breaking above 4560 within a day or two.