INDEX BRIEFS: SENSEX, INDIA by DARYL GUPPY

The Sensex is best seen on a weekly chart with upper resistance levels are easily seen. The most important feature is the uptrend line. The break below this line changed the function of the line. This is now acting as a resistance level for the rising trend. We expect to see the index rise to this line and then retreat from it. Support is provided by the value of the lower edge of the long term GMMA. This is best seen on the daily chart.



The primary resistance level for the current rally is at 17,500. A retreat from this level may develop a sideways consolidation pattern with support round 15,500. The key danger in this trending behaviour is the volatility retreat such as that seen in August.



The daily chart shows good support from the long term GMMA near 16200. The lower edge of the long term GMMA is near 15500. This is a steady and well supported trend. Traders can apply Darvas box trading techniques to buy as new highs and breakouts from new highs are created. The value of the long term trend line is well above the current index activity and this leaves room for fast rallies.

The key feature to watch in any market retreat is the reaction of the long term GMMA. If there is developing indications of compression it suggests trend weakness. Traders need to be alert for a significant test of support. Increased compression in the long term GMMA will confirm a major tests of trend strength.

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Article contributed by Private Trader, Market Expert, Trading Coach and Best-Selling Author Mr. Daryl Guppy. For more articles and commentaries from Daryl Guppy, click HERE.