Thursday, 15 December 2011

NCDEX Chana Tips

Technical analysis
On the regular chart, the bounce in NCDEX Chana was sharp as anticipated and was scary for anyone who was short. It has retraced 78.6% of the five waves declining pattern in its wave A and has reversed, indicating that there exist a high probability that wave C has ensued. The rise was an A-B-C pullback in which wave C was an extended one and was almost 261.8% of wave A.


Now, since it has reversed, hence from 78.6% the equality target on the downside for wave C down comes to 2760. On the upside it has completed the right shoulder of the bearish head and shoulders pattern signaling that a deep cut in prices is awaiting in chana.


The weekly KST and MACD continue to remain in sell mode which indicates that this was just a short covering rally and the bears still have an upper hand. On the monthly charts it had formed a Dragonfly Doji Candlestick pattern at the top i.e. above two standard deviations from its mean signaling that the high of 3700 remains a medium term top in Chana.


Recommendation
Sell Chana Nov on rise 3450-3480. Target 3000, stop loss 3570 (Current – 3440).

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