Weekly Technical Analysis - Sep 25 2011

Markets slumped in the latter half of the week, after the US Federal Reserve's statement renewed fears of a double-dip recession in the US. Also, the Fed's proposed new package, termed as 'Operation Twist', to buy long-term bonds and sell short-term bonds worth $400 billion did not inspire any confidence in investors worldwide.



The Sensex had scaled to a high of 17,191 mid-week. However, intense selling pressure in the latter half saw the index plunge to a low of 16,052 -- down a whopping 1,139 points. The BSE benchmark eventually ended the week with a loss of 4.5 per cent at 16,162

According to the monthly Fibonacci chart, the Sensex has sent a sell signal on the monthly charts. The index, if it keeps below 16,080, is likely to witness a sharp fall to 15,650-odd levels. Further lower, it may get support around 15,340-15,020

According to the weekly charts, the Sensex is likely to seek support around 15,725-15,450. In case of an up move, it is likely to face considerable resistance around 16,600-16,870.

The NSE Nifty moved in a range of 339 points. From a high of 5,168, it tumbled to a low of 4,830. The index settled with a loss of 4.3 per cent at 4,868.

The Nifty has considerable support around the 4,800-level, and slightly below at 4,750. However, the momentum oscillators on the daily and weekly charts are in favour of a further fall, hence these levels may be broken on the downside.

A move below 4,750 could be very bad for the markets, and could trigger accelerated selling. The weekly charts indicate support around 4,650, while the monthly charts predict a fall to 4,500, which also seems possible.