Blood bath in Dalal street. We’ve witnessed a deep correction in Sensex in last 1 month. Does the technical chart of Sensex justifies that? Let’s check that using Ichimoku indicator.
On 7th Jan 2011, Sensex closes below Kijun-sen line. That was the first signal of its weakness. Not only that, the price closes below Kumo also; thus giving a clear bearish breakout. Sensex was at 19691 levels at that time and at the time of writing this article, Sensex is trading around 17,550 levels; down almost 2100 points from 07-Jan-2011 levels.
Now, the next question is when will it stop its downtrend. The most accurate answer is "I don’t know". Yes, there are many ways to calculate support levels like Fibonacci levels, Gann square, Pivot levels etc., but it doesn’t mean it can not break that levels. 16,500 – 16,700 seems to be common figure for next support level.
If you’ve taken short position, you should cover that once Sensex closes above kijun-sen line. That will be the good time to invest also for long term. But the bull run will start only if Sensex closes above kumo (see chart above kijun-sen and kumo lines).
Subscribe Updates, Its FREE!