The 100 index is heading south once again, possibility remains for another test to channel support, which rest below 7k at present. The medium term trend line support has been tested thrice since early January, currently reads 6850 (Yellow line). This medium term support, if holds, will confirm that the upward channel is still intact and the recent test was nothing but snake’s zigzag formation. But if it does not bear will guide the index to long term moving average support at 6400 (blue line on chart) but if this happens channel will break and probably the optimism.
Well that’s right, volume study suggests that market is still optimistic as on every up stick volume surges but shrinks on every down tick. This behavior suggests that optimism remains for a higher test. Led Zeppelin’s Stairway to Heaven goes well here. My other observation is that when index fells volume shrinks this strengthened the notion that majority believes that market will eventually gain so they prefer to hold on to their positions even on a decline. This Monday when index surged volume surged too but when it closed in red I observed pessimism on few faces. A few more days of decline may prompt these investors to let loose their holdings this may take the index below its trend line support in other words volume would be key to judge investors behavior. Sayonara
No comments:
Post a Comment